December 8, 2023: The Reserve Bank of India (RBI) decided to maintain a status quo on the repo rate for the fifth time in a row. The move to hold the rates at 6.5% by the six-member monetary policy committee headed by governor Shaktikanta Das was announced after a three-day meeting today.
For the uninitiated, the repo rate is the interest the RBI charges from banks in India to lend funds. This interest is also known as the repurchase rate in banking parlance.
Even as interest rates spike in other Western economies, the RBI has been able to keep the key benchmark rate stable amid softening inflation and better-than-expected growth numbers. India’s GDP grew at a higher-than-expected 7.6% in the July to September 2023 quarter, initial estimates by the National Statistical Office show. On the other hand, the headline retail inflation rate eased to a five-month low in October while Consumer Price Index-based inflation eased to 4.87% in October from 5.02% in September 2023.
After increasing the key benchmark lending rate by 250 basis points (bps) or 2.5% cumulatively since May 2022, the RBI first decided to hit the pause button in April 2023. The repo was last increased in February this year, from 6.25% to 6.50%.
How will the move impact real estate?
With the RBI leaving the repo rate unchanged in its December policy, home loan interest rates would remain stable, a move that would augur well for the real estate sector in India. According to Sterling Developers chairman and managing director Ramani Sastri, the pause in the policy rate will further boost demand for the residential real estate sector in the country.
“The economy is looking robust with high investments across businesses in recent times. A recovery in property prices and a rise in yields have made residential properties attractive yet again and have been responsible for continued demand in the sector. The long-term benefits of owning a home have led to sustainable growth in the segment and we see this up-cycle continuing in 2024. An increase in earning potential, end user-driven demand, a need for a better standard of living and the growing base of aspirational consumers and their lifestyle changes have led to substantial demand and growth in the sector,” says Sastri.
Driven by unprecedented levels of demand, the sector has achieved consistent levels of growth in the past year. Homebuyers can avail of housing loans at 8.25% annual interest at present.
Cheapest home loans in India in December 2023
| Bank | Interest rate for customers with the best credit score | Lowest interest | Highest interest |
| HDFC Bank | 8.5% | 8.5% | 9.40% |
| LIC Housing Finance | 8.5% | 8.5% | 9.70% |
| Indian Bank | 8.5% | 8.5% | 9.90% |
| Punjab National Bank | 8.25% | 8.25% | 10.1% |
| Indusind Bank | 8.50% | 8.50% | 10.55% |
| Bank of India | 8.50% | 8.50% | 10.60% |
| IDBI Bank | 8.50% | 8.50% | 10.75% |
| ICICI Bank | 8.50 | 8.50% | 9.15% |
| Bank of Maharashtra | 8.60% | 8.60% | 10.30% |
| Bank of Baroda | 8.60% | 8.60% | 10.50% |
| State Bank of India | 8.70% | 8.70% | 9.65% |
| Union Bank of India | 8.70% | 8.70% | 10.80% |
| Kotak Mahindra Bank | 8.70% | 8.70% | 9.60% |
| Axis Bank | 9.0% | 9.0% | 9.40% |
| Canara Bank | 9.250% | 9.25% | 11.25% |
How to get the best rate?
The lowest rate offered by a bank is provided to a customer meeting specific eligibility criteria. These include:
Women borrowers: Almost all banks in India offer some incentive to women borrowers. All factors being equal, a woman borrower will pay less than a man.
Borrowers with good credit scores: This is the single biggest criterion based on which banks decide to change interest rates.
Salaried applicants: Salaried customers are offered home loans at lower rates.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
sunita.mishra@proptiger.com
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