Home, consumer loans may be cheaper in new year 2008

Home, consumer loans may be cheaper in new year

The New Year is likely to bring in good news for borrowers as interest rates on home and consumer loans could decline from the second quarter onward, but high fuel and food prices might play spoilsport by putting pressure on inflation, bankers and economists feel.

Experts feel that interest rates have peaked and with deposit rates on the decline, consumers could see softening of interest rates in 2008 as the prudent stance of Reserve Bank for almost the whole of last year managed to keep inflation low without disrupting economic growth.

“Our margins were a bit strained during the year but now banks have begun reducing deposit rates. With RBI’s objective to keep inflation close to three per cent in the medium term, interest rates are bound to come down,” Union Bank of India Chairman and Managing Director M V Nair said.

Yes Bank Managing Director & CEO Rana Kapoor also felt a 0.5 per cent reduction in interest rates was in the offing.

“We see no decline in interest rates in the next three months. RBI is not likely to reduce rates in January but in the next fiscal starting April, there could be a reduction of half a per cent,” he said.

Reserve Bank has raised key interest rates six times in the past year-and-a-half. It has also raised banks’ mandatory cash deposits or Cash Reserve Ratio by 2.5 per cent since December 2006 to 7.5 per cent for tightening liquidity as part of steps to keep inflation within limits.

Banks also raised interest rates on home, vehicle and personal loans in line with these measures. At present, floating home loan interest rates range from 10-11.5 per cent, while fixed rates are two-three percentage points higher. MORE PTI NAP DP AMA UPD 01011544 DEL dm.ashok.dc: I tried my best to put myself across.



Courtesy : financialexpress