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RBI Rate Cut...

Last updated: April 23 2012
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  • blunyt
    started a topic RBI Rate Cut...

    RBI Rate Cut...

    Hi,

    Just read a news on TOI regarding rate cut from RBI. Will it be affected on Home Loans as well?

    RBI rate cut: Top banks say interest rates to go down, but not immediately - The Times of India

  • realacres
    replied
    Originally posted by poorbuyer View Post
    Realacres has put it in a very nice way. This rate cut is just sentimental, not all banks will cut their rates to the extent of 50 basis points (0.5%). This is in spite of RBI reducing the Cash Reserve Ratio (CRR) by 75 basis points from 5.5% 4.75% in Mar this year.

    God knows but banks say their cost of borrowing is still high, since people no more depositing their money with banks. Many people heavily invested in the RE and Gold market.

    HDFC and SBI not yet reduced their rates, and even if they do it, it will be not 0.5% reduction.

    So its not time to cheers up yet.


    ~~ गुलज़ार
    Main Shayar toh nahi, magar e ..............

    Yes, lot of money has now gone in gold. It is therefore RBI has put cap on gold loans recently & the ones to be hit the most are cos like Mannapuram gold loans.

    Small investors didn't knew what to do & hence put money in gold. Maybe RBI don't want everyone to chase gold, hence such new rules.

    Earlier it was RE & now gold. Lets see what next.

    Leave a comment:


  • poorbuyer
    replied
    सुना है कुछ खाबों का खून हुआ है!!!!

    Realacres has put it in a very nice way. This rate cut is just sentimental, not all banks will cut their rates to the extent of 50 basis points (0.5%). This is in spite of RBI reducing the Cash Reserve Ratio (CRR) by 75 basis points from 5.5% 4.75% in Mar this year.

    God knows but banks say their cost of borrowing is still high, since people no more depositing their money with banks. Many people heavily invested in the RE and Gold market.

    HDFC and SBI not yet reduced their rates, and even if they do it, it will be not 0.5% reduction.

    So its not time to cheers up yet.

    सुबह सुबह इक ख्वाब की दस्तक पर दरवाजा खोला
    देखा सरहद के उस पार से कुछ मेहमान आये हैं
    आँखों से मायूस सारे चहरे सारे सुने सुनाये
    पाँव धोये हाथ धुलाये आँगन में आसन लगवाए
    और तंदूर पे मक्की के कुछ मोटे मोटे रोट पकाए
    पोटली में मेहमान मेरे
    पिछले सालों की फसलों का गुड लाये थे
    आँख खुली तो देखा घर में कोई नहीं था
    हाथ लगाकर देखा तो तंदूर अभी तक बुझा नहीं था
    और होंठों पर मीठे गुड का जायका अब तक चिपक रहा था
    ख्वाब था शायद ख्वाब ही होगा
    सरहद पर कल रात सुना था चली थी गोली
    सरहद पर कल रात सुना है कुछ खाबों का खून हुआ है!!!!

    ~~ गुलज़ार

    Leave a comment:


  • realacres
    replied
    Just wanted to throw some light on recent interest rate cuts by RBI :-

    > All banks are not going to cut rates equivalent to RBI cut i.e. 0.50%,
    > Couple of private banks reducing by 0.20-0.25% but they will be now same as that of PSU banks. No great benefit,
    > Not all banks are going to cut their interest rates,
    > Bank Of Maharashtra cut their lending rates to home, auto by mere 0.10%.

    More importantly, the current accounts have reached quite low & so has FDs.
    The NPAs too are on rise & hence banks are more on cautionary mode.
    Anyways, RBI has already indicated to the banks to be wary to loans towards RE & as taxes now need to be paid by buyer, the max loan amount has been reduced to 70% max.

    To really push sales, the prices needs to come down by atleast 20-25% alongwith another 1.5-2% cut in interest rates but as RBI has already said, in near future there is no scope for further rate cuts. So, only option remains in cut in RE prices.

    Leave a comment:


  • JumboHulk
    replied
    RBI's repo rate cut to cheer builders, buyers

    RBI's repo rate cut to cheer builders, buyers


    MUMBAI | NEW DELHI: RBI's decision to cut repo rate by 50 basis points is expected to improve realty sales volumes and ease the pressure a bit for cash-strapped developers. For many developers, the past three years have been a forgettable one with their cost of funding rising in the backdrop of tight liquidity conditions. Cash flows were also a matter of concern with sales volumes touching new lows in key markets, including Mumbai.

    But the rate cut is certain to cheer both developers and home buyers since home loan rates are likely to come down, and better sales volume is expected to improve realtors' cash flows.

    "It is a good move by RBI as the cost of funds had become too high for developers. This was a big concern for the industry," said Pradeep Jain, MD of Parsvnath Developers. The cost of borrowing for Parsvnath is around 15% currently, and Jain hopes this rate cut will help bring it down a bit.

    The central bank was widely expected to cut repo rate by 25 basis points in its annual monetary policy for 2012-13. But despite a more-than-expected rate cut, realty developers are still asking for more.
    "This is really a starting point, but little more (rate cut) is required to trigger a full-fledged recovery," said Niranjan Hiranandani, MD of Hiranandani Group.

    According to a recent Edelweiss Securities report, aggregate net debt of 11 listed companies remained stubbornly high, rising 2.4% over last quarter - closing at 41,700 crore as on December 31. Realtors had continued to tap NBFCs and PEs for funds at a significantly higher cost of 16-20%. In the backdrop of this stretched scenario, realtors are somewhat relieved that cost of funds will ease now.

    Anuj Puri, country head for property consultancy Jones Lang LaSalle India, sums up the situation saying: "It will help developers as their interest outflow will reduce."

    Hiranandani, however, thinks the benefit of lower funding cost is likely to be restricted. "It (rate cut) will be more beneficial to actual end users than developers themselves in the form of lower cost of funding. For developers, rising input costs and several taxes will partially offset the rate cut benefit," he said.

    RBI, in its forward guidance, said lower potential growth and upside risks to inflation will limit space for further cut in policy rates. This is expected to push sales volume as buyers now may not defer their home buying in anticipation of further rate cuts, realty brokers said.


    Link -> RBI's repo rate cut to cheer builders, buyers - The Economic Times

    Leave a comment:


  • sankartel
    replied
    Hi
    Everyone (Even SBI) telling that there will be a rate cut..But is this applicable only for new customers ? ANy rate cut (Seems it will happen only if base rate decreases) for existing customers ???

    Leave a comment:


  • JumboHulk
    replied
    Originally posted by jigarshah View Post
    Source - CNBC moneycontrol

    The Reserve Bank of India may have cut policy rate by 50 basis points , but it may be a bit premature for home loan customers to rejoice. Most banks have said that they will wait for some time before passing on the benefit to their home loan customers. That is because deposit rates continue to remain high, and despite offering high interest rates, banks have not been able to mobilise the desired funds through deposits. In such a scenario, cutting lending rates when borrowing rates are high will hurt banks' margin.
    Yes, read the same. seems that Banks are opting cautious approach. Does this high costs also related with NPA? As per RBI NPA number has been increased causing affect on liquidity.

    Leave a comment:


  • kartikpai
    replied
    As per the conversation that I had with my dad who works with IDBI , the marginal fall should be in a range of 0.5% to a maximum of 1% . Also as per the revised RBI guidelines, banks are instructed not to consider the cost of additional amenities while funding the loan. i.e If you are buying a flat worth 30 lakhs and builder is charging you 1 lakh for amenities separately then the total loan amount eligibility would be (30-1)*.85 = 24.65 lacs as compared to previous 25.5 lacs . Though not much of difference but for projects by builders who charge a premium on amenities should take a definite hit .

    Leave a comment:


  • jigarshah
    replied
    Originally posted by blunyt View Post
    Hi,

    Just read a news on TOI regarding rate cut from RBI. Will it be affected on Home Loans as well?

    RBI rate cut: Top banks say interest rates to go down, but not immediately - The Times of India
    Source - CNBC moneycontrol

    The Reserve Bank of India may have cut policy rate by 50 basis points , but it may be a bit premature for home loan customers to rejoice. Most banks have said that they will wait for some time before passing on the benefit to their home loan customers. That is because deposit rates continue to remain high, and despite offering high interest rates, banks have not been able to mobilise the desired funds through deposits. In such a scenario, cutting lending rates when borrowing rates are high will hurt banks' margin.
    For financial year FY12, deposits for the industry as a whole grew at little over 13%, while non-food credit grew at 16.8%.
    “Immediately, we are not taking any call on interest rate cut. In a week or two, our asset liability committee (ALCO) will meet to decide upon this. We need to consider our cost of funds for this. We will also take cue from our peer banks,” R K Bansal, Executive Director, IDBI Bank told Moneycontrol.com.
    In case of any trimming of lending rate, bankers are a bit apprehensive of its impact on the net interest margin (NIM). Hence, they are looking to reduce both deposit and lending rates in order to maintain their NIM. However, demand for funds is likely to be muted as the credit off-take remains low in the first two quarters of a financial year.
    “The rate cut by RBI has to be transmitted,” said A Chavali, Executive Director, Indian Overseas Bank .
    “However, rate cut depends on certain factors. We will be closely monitoring the benchmark short-term CD rates before we take a call on rate cuts. Moreover, if asset quality becomes better in Q4, it will prompt us for lending rate cut. In next one fortnight, we would take our rate cut decision. If we cut rates, we will cut both deposit and lending rates.”
    Currently, home loan buyers are currently paying higher rate of interest in the range of 11.50-13% on floating basis. Customers who had earlier opted for dual rate scheme and now just exhausted their fixed tenure rate, are paying the same rate of interest.
    “While reducing the policy rate by 50 basis points, RBI has also hinted that there may not be any more big cuts. Bankers need to consider this fact. Maybe, some banks will decrease rates in two tranches (25 bps each). In May, rabi corp is also coming up. It will result in repayment of agricultural loans. Hence, lenders will have more leeway to lower interest rates,” said a senior banker from Union Bank of India .

    Leave a comment:

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