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Should buyers go for a fixed rate home loan or wait for post interest rate cut?

With the interest rate cut of 0.25 percent by RBI, analysts think it is a good time to buy a house and should opt for floating interest rate for the home loan.

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People who were waiting for lending rates to come down got answers for their concern from RBI by slashing the repo rate by 0.25 percent. Though the interest rates are continuously observing new lows, experts predict that the rate won’t fall from the current level. This poses a question for new home buyers whether to go for a fixed rate or floating rate home loan.

Our Director, Mr Vaibhav Sankla, talks about the future saying that where the inflation is going down significantly, the GDP is showing prominent signs of improvement, the fiscal deficit is under check and government being under pressure to boost the economy, further interest rate cuts in the future can be expected. He further added that as compared to other developed countries, India has to bridge the gap in the interest. Due to this, the government is under continuous pressure to reduce the rates further.

As RBI has cut the repo rate, with the current level being 6.25 percent, the lowest in six years, and market experts predicting this rate cycle to continue, a homebuyer might want to go for a floating interest rate home loan. They believe that the interest rates on home loans are low today and as the repo rate gets cut further, the loan rates are likely to fall in the coming time.

Mr Sankla was further quoted as saying that generally, interests on fixed rate are significantly higher than the floating rate ones and might cost you close to 1 percent more than the floating rate.

Source : The Times of India (Mumbai)