Home Loan EMIs To Get Cheaper? Here's What Experts Think

Will the home loan EMIs get cheaper? Well, lenders believe that the interim budget has set the stage for more affordable home loans and decreased interest rates overall.

The reduced fiscal deficit at 5.1 per cent has led to borrowing being nearly Rs 1 lakh crore less than expected. Also, as a greater portion of government expenditure is allocated to capital expenditure (capex), it is expected to be non-inflationary, providing the Reserve Bank of India (RBI) with greater flexibility to consider rate reductions in the future, as per a report in The Times Of India.

The Centre's strategy of reducing the fiscal deficit and cutting central borrowings is seen as a way to put indirect pressure on RBI to increase liquidity and lower interest rates.

Dinesh Khara, State Bank of India Chairman, told the daily that enhanced fiscal metrics are anticipated to contribute to a decline in interest rates. While lenders anticipate the RBI to initiate interest rate reductions in the latter part of 2024, there is a general perception that rates are moving in the direction of softening.

"PMAY Grameen envisages an additional two crore houses in the next five years. Some incentive schemes have also been announced for the middle class in urban areas and in slums and unauthorised colonies. Both incentives would be like subsidies and improve the commercials of home loans," IIFL Home Finance CEO Monu Ratra said.

Bank of Maharashtra MD & CEO AS Rajeev is expecting the interest rates to come down in the second quarter of the year. "There are other factors - inflation, supply chains and the demand-supply situation," he added.

Zarin Daruwala, the India head of Stanchart, said a clear theme from the budget was consistency, where the government has remained focused on fiscal consolidation by speeding up debt reduction and continuing its capex thrust.

"Both of these, by way of lower interest rates and crowding-in, respectively, will trigger and grow private investments," she said.

Aditi Nayar, chief economist at ICRA, said the higher-than-expected capex and lower-than-projected fiscal deficit suggest the quality of expenditure is going to be healthier. "Faster fiscal consolidation and a dip in borrowings will help to cool yields further over the coming year, as long as the estimates for revenue and capital receipts appear credible as the year progresses," said Nayar.

There was a general expectation that the government led by Narendra Modi would succumb to the pressures of electoral politics and implement populist actions in preparation for the 2024 Lok Sabha election. However, the Interim Budget 2024 has consciously avoided any such measures.

Finance Minister Nirmala Sitharaman on Thursday presented her sixth consecutive budget with a speech lasting 56 minutes, her shortest-ever.