The Reserve Bank of India has directed banks to set aside more capital to cover risks on advances to realty sectors and has raised repo rate by 0.25 per cent to 7.50 per cent .
The banks are likely to charge higher interest rates on loans to builders to garner more capital. In short, loans to builders will be hiked. The builder in turn will pass on the burden to the customers.
A repo rate hike is aimed at increasing the cost of retail and housing loans to prevent overheating in these rapidly growing sectors. RBI has also raised the standard provision for loans to property developers from 1 per cent to 2 per cent. This is a signal to banks to slow down giving loans to the booming realty market.
So you will end up paying more for your dream house. Besides this, personal loans will also be more expensive. You will no longer enjoy freebies on your credit cards. Borrowing for buying shares too could become costlier.
What are your views on the RBI's credit policy?
Will the realty sector be hit by this move?
Are you ready to pay more interest on your housing, personal loans and let go of credit card freebies?
Will these measures help curb inflation?