The Reserve Bank of India has tightened home loan norms by asking banks not to lend more than 80 per cent of the value of the house to borrowers. This means that new borrowers will have to shell out at least 20 per cent of the total value of the house from their pockets.
The central bank has also increased the risk weight for housing loans above Rs. 75 lakh to 125 %. It implies that loans above Rs. 75 lakh will now become more expensive.
The RBI has also made it harder for banks to offer teaser rates where the home loan rates is fixed for few years and later it turns into a floating rate
In a move to curb inflation, the central bank on 2 Nov hiked the repo and reverse repo rates by 0.25 %, making loans costlier if banks decide to pass on the rate hike.
Accordingly, the short term lending rate or (repo rate) stands at 6.25 % and the borrowing rate (reverse repo) at 5.25 %.
The RBI has, however, left the cash reserve ratio or bank rate, which is the amount of cash that banks have to park with the central bank to maintain prudential norms, unchanged at 6 %.
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