Budget 2018 and Your Loan – Repo Rate Unchanged

Repo rate vs interest rate

Budget 2018-19, the 5th budget and the last budget in P.M Narendra Modi’s tenure, presented by Finance Minister Arun Jaitley, left no hopes for reduction of home loan or personal loan interest rates.

Though the budget sounds rural and weaker section friendly, it is worth mentioning that it is a much foresighted budget which if really implemented and taken as it is to the poor, will surely make India Proud.

After a two day meet, the Monetary Policy Committee (MPC) of the Reserve Bank of India, announced a no repo rate change. Repo Rate, the rate at which the RBI lends money to the banks, doesn’t change and remains at 6%.Five members of the monetary policy committee voted to keep rates unchanged, with one member, Michael Patra, voting for a 25 basis points hike.

The inflation which is at a high pace is expected to increase further, as the analysts see. Commenting on the RBI policy statement, Anjali Verma, economist, Phillipcapital India, said: “The policy decision is in line with our expectation along with the hawkishness that is built into the statement. While we retain status quo from RBI for FY19, a risk to our call may come from higher inflation.”

Here are some other key projections from the central bank’s sixth bi-monthly monetary policy statement of 2017-18:

– GVA growth (value of goods and services) for 2017-18 projected at 6.6%
Reverse repo rate (rate at which it borrows from commercial banks) kept unchanged at 5.75%
– Inflation forecast at 5.1% in fourth quarter of fiscal year 2018
– RBI estimates retail inflation in 5.1-5.6% range in first half of 2018-19, 4.5-4.6% in second half.

Know about repo rate and its influence on loan interest rates

Repo Rate 6%
Reverse Repo Rate 5.75%
Interest Rate – Home Loan 8.3%
Interest Rate – Personal Loan 10.35%

Tax Advantage from Union Budget : 

There is no more medical reimbursement and transport allowance by the government to the salaried and the pensioners. There is a standard deduction of Rs. 40,000, no need of submitting bills and documents. There is an increase of 1% cess from 3% to 4%. The net income on which benefit would be available is INR 5,800 and consequential income-tax saving will depend on the income-tax bracket an individual falls in. In case of taxpayer who are differently abled persons, the transport allowance exemption would continue.

Tax Details Before Budget 2018-19 After Budget 2018-19
Medical Expenses 15,000 Nil
Transport Allowance 19,200 Nil
Standard Deduction 40,000

Loans Cheaper than Usual :

Repo rate vs interest rate
Repo rate vs interest rate

Before 2016, the home loan interest rates used to be 14%. Slowly RBI reduced the repo rate and in turn, there is a reduction in interest rates to 8.3%.

If you are one of the luckiest persons to shortlist your dream home, then why delay, the interest rates are much lower than ever before. Book your home and start paying your home loan EMI and close it as fast as you can.

Loanyantra looks at all your financial needs. Why worry for anything else. We look at the trends of the interest rates and guide you the best lender according to your requirements. Whether a home loan or personal loan, we are just a missed call away. Once you are our customer, your loan is our loan. Follow our updates and start saving on your loans and close it early.

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