Today, the Reserve Bank of India cuts its benchmark lending rates by 25 basis points, taking its cumulative repo rate cuts to 135 basis points so far this year. Home loan borrowers have good news related to repo rates. RBI still maintaining an accommodative stance, some analysts expect further rate cuts from the central bank, given broad-based demand weakness in the economy.
“The official policy stance remains accommodative, suggesting that further loosening will follow in the near term. We are pencilling in another 25 bps cut in December,” said Hilan Shah, senior India economist at Capital Economics.
All banks have asked to link new floating rate retails loans, including auto and home loan, to an external benchmark, from 1st October. For new floating auto and home loans, banks have the freedom to decide the spread over the external benchmark.
The interest rate of the auto and home loan rates should be reset at least once in three months, which is depending on the change of the external benchmark.