Wanna Know the Factors That Affect Indiabulls Home Loan Interest Rate?

The moment you decide to avail a home loan, it would not be wrong to say that interest rates play a pivotal role in the overall journey. This is the reason why borrowers always pay attention to the same.

So, suppose, if you are going to buy the Indiabulls home loan, let’s just understand what are the factors that lenders consider while setting the interest rates. Just go through the article below to know the factors that go into arriving at the lowest home loan interest rates and lending rate offered by the bank.

Marginal Cost of Fund Based Lending Rate (MCLR or Base Rate): Base Rate or MCLR is the minimum rate set by the Reserve Bank of India (RBI). Below this rate, banks are not allowed to grant a loan to the applicants. Moreover, this is done to make credit markets more transparent and to ensure that the banks pass on the lowest cost of funds to their customers. Moreover, according to the new directives, banks set five benchmark lending rates for different time periods (overnight, one-month,three-month, six-month and 1 year).

Repo Rate: Talking about a repo rate, it is a rate at which the RBI lends money to the bank in the event of any shortfall. It is basically a financial instrument, which is used by Central Bank to control inflation. However, if the RBI wants to put more money into the circulation, it will lower the repo rate. And, the moment RBI increases or decreases the repo rate, this will have an effect on the interest rate and banking products such as loans or mortgages.

Reverse Repo Rate: It is the rate at which the RBI borrowers the money from banks. This financial instrument is used by the Central Bank to control the money supply. An increase in the reverse repo rate will lead to a decrease in the money supply in the country and vice-versa. This is because it gives banks the leverage of parking their money with the RBI. So, this money will not be available for supply/credit in the market. Thus,the increase/decrease in the reverse repo rate will have a direct impact on the lending rates.

Cash Reserve Ratio: When it comes to CRR, it is a fraction of the total deposits of the customers, on which the banks have to hold as reserves, either in terms of the cash/deposit with the none other than RBI. This is to be done to ensure that banks do not run out of cash/money while meeting the payments demands of their customers when they need money. Here, CRR is considered to be an important monetary policy tool, which is used to control the money supply in an economy.

Statutory Liquidity Ratio: If we talk more about the deciding factor for Indiabulls home loan interest rate, there is no denying the fact that every bank has to maintain a certain percentage of their Net Demand and Time Liabilities as liquid assets in the form of cash, gold, etc. However, this ratio between liquid assets and NDTL is called the SLR. Moreover, maintaining the SLR restricts the bank to pool more money into the economy, which again has an impact on lending rates.