RBI uses the axe, home loan rates may go down

FESTIVAL TIME: Home loan borrowers are set for good news during Diwali.

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Mumbai: The Reserve Bank of India’s cut in the cash reserve ratio has released Rs 20,000 crore into the market—happy news for home loan borrowers because it may stop rise in interest rates.

HDFC chairperson believes Deepak Parekh the fall in oil prices, moderated inflation and rising liquidity will cap interest rates. "Oil prices are coming down, inflation has moderated. Liquidity was an issue and this move by RBI will infuse liquidity. I am hoping that interest rates have peaked," says Parekh.

Some analysts say the there could be further good news for borrowers. “I suspect that there could be further cuts in rates before, during or after the credit policy,” say stock analyst Harsh Roongta.

Banks aren't willing to commit themselves on a cut, but say funding will get easier with more money to lend. But to know whether your EMI will come down watch out for RBI's credit policy on October 24. There could be a Diwali gift for you.