Home loans over Rs 75 lakh to get cheaper
15 Oct 2020

Loans for premium homes where borrowing is above Rs 75 lakhs are likely to get cheaper with the Reserve Bank of India making it easier for banks to lend to this segment. Earlier, banks had to set aside higher capital for larger loans which caused them to charge higher rates for this segment now with the differentiation removed rates could rationalise.
“Recognising the criticality of real estate sector in the economic recovery, given its role in employment generation and the interlinkages with other industries, it has been decided, as a countercyclical measure, to rationalise the risk weights by linking them only with loan-to-value ratios for all new housing loans sanctioned up to March 31, 2022,” the RBI said in a statement. Announcing this in the policy, RBI governor Shaktikanta Das said that this was part of RBI’s development measures.

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Under the new regulatory regime home loans above Rs 75 lakh will attract a risk-weightage of 35% as against 50% earlier. The higher the risk weightage in a loan the higher the capital that lenders are required to set aside. Home loans have relatively lower risk weightage compared to business loans or other personal loans (excluding gold loans).
The current loan to value requirement will remain which means that the borrower will have to bring in 25% of the value of the loan for high-value houses and 20% for those below Rs 80 lakh.