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Mumbai: Amid uncertainties over economic growth in the country, here comes a piece of good news for the home buyers. In a move to make home loans cheaper, the Reserve Bank of India (RBI) on Friday said that it will rationalise the risk weights and link it to loan-to-value (LTV) ratios for new home loans till March 31, 2023.
Giving details, RBI governor Shaktikanta Das said that the risk weights for individual housing loans were rationalised in October 2020 by linking them only with loan to value (LTV) ratios for all new housing loans sanctioned up to March 31, 2022. However, he added that recognising the importance of the housing sector, the RBI has decided to extend the applicability of these guidelines till March 31, 2023.
Giving feedback on the guidelines, Ram Raheja, director at S Raheja Realty told News 18 that for the real estate sector, the pandemic followed by the current global political crisis has been a silver lining. He added that being a tangible asset and safe haven investment, people continue to invest in real estate sector.
He further stated that as home loans are likely to remain cheaper, residential real estate will witness a further impetus.
He went on to add that with the timeline for loan-to-value rules to be relaxed until March 2023, it will incentivise homebuyers to take the plunge, leading to a further rise in demand.
The home buyers must note that the loan-to-value (LTV) ratio is a financial ratio that compares the size of a loan that customers borrow to the value of the asset the customer will purchase. Generally, the lenders use LTVs to determine how risky a loan is and whether they will approve or deny it.
Earlier in the day, the RBI kept key lending rates — repo rate unchanged during the Monetary Policy Committee (MPC) meeting for the financial year 2022-23. As per the RBI announcement, the repo rate remained at 4 per cent. Hence, the home loan borrowers who pay easy monthly installment at a flexible interest rate, will continue paying the same rate of interest as applicable now.
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