Early Diwali for homebuyers: RBI move to reduce rates, boost realty demand

The decision to rationalise risk weights woule particularly benefit borrowers of higher value loans

The Reserve Bank’s move to rationalise risk weightage on home loans and link it only to loan-to-value (LTV) ratios for new sanctions up to March 2022 is expected to make more credit available to borrowers. It will also bring down cost of funds to buyers, and improve demand for homes, said developers and consultants.

The RBI also hiked the single-party exposure limit for loans to retail and small business loans from Rs 5 crore to Rs 7.5 crore.  

Home loans will now attract a risk weight of 35 per cent where LTV is less than or equal to 80 per cent, and