The Government of India has extended the lower risk weightage on housing loan by one year from 31st March 2022 to 31st March 2023. Good news for home loan borrowers, govt extended the lower risk weightage. The Reserve Bank of India (RBI) made an announcement in this regard on Friday while speaking on the RBI Monetary Policy meeting outcome.
The Central Bank of India said that the move aims to boost credit flow to the real estate sector. This means credit flow for housing sector will remain smooth as more funds will be available at banks for home loan disbursal.
Impact on home loan EMI: As the RBI has kept key rates unchanged, it simply means that low home loan interest rate regime would continue further that means home loan borrowers won’t have to pay higher monthly EMI as home loan interest rates at various banks are expected to maintain status quo.
Rise in home loan lending: The RBI Governor went on to add that enable Indian banks lend more to individual homebuyers without feeling the stress on their balance sheets. In other words, it would help lenders on capital adequacy front and enable them to provide more home loans, a win win situation for the new borrowers and the housing sector.
Ease of home loan availability: Highlighting the benefit of low risk weightage on home loans, RBI Governor Shaktikanta Das said that the move means requirement of capital provision for banks would come down and it would ensure more credit is available to borrowers, particularly for high-end properties.
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Status quo on house property prices: After RBI maintaining status quo on key interest rates and extending lower weightage on housing loan by one more year, probability of developers passing on the rising input costs to the homebuyers have come down. Now, builders may not increase the house property prices as the RBI’s move may boost the confidence of homebuyers. So, home loan EMI of the new borrowers are expected to remain at lower levels in the wake of no rise in house property prices.
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