#25 For 2025: Can RBI’s upcoming policy steps help those who yearn for a place they can call their own?

The New Year could bring cheer for home loan borrowers who have been waiting for a rate reduction for over two years since the central banks paused the rate hike cycle. A shift in the policy stance to ‘neutral’ by the RBI and increased calls for a rate cut to boost growth have given hope to borrowers of a possible lowering in 2025, according to experts.

Economists at Standard Chartered Bank, DBS Bank and Nomura have predicted a policy rate cut in February while expecting another one Influencers Fashion Cinema in April, reducing borrowing costs, particularly for home loan borrowers.

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If lenders lower rates, this will bring instant relief to home loan borrowers, bankers said.

According to Sanjay Mudaliar, executive director, Bank of Baroda, “Rate reduction can bring back growth momentum, which is good for spurring growth in other consumer sectors.”

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Banks have an outstanding home loan portfolio of over Rs 28 lakh crore.

The RBI raised policy rates by 2.5 percentage points between May 2022 and February 2023, after which it has maintained the repo rate at 6.5%.

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The largest home loan provider, State Bank of India, has been charging between 8.5% and 9.85% (linked to the individual’s rating) for nearly two years now, while old home loans linked to marginal cost lending rate (MCLR) rose in the last few years. SBI’s external benchmark lending rate has been 9.15% since February 2023.

Arjun Chowdhry, group executive, Axis Bank said, “The bank expects a strong growth driven by consumer confidence and new project launches, aiming to rejuvenate the real estate sector.”

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