Finance Minister Arun Jaitley said that the government wants to lower the interest rate regime to a level where paying equated monthly instalments (EMIs) for home loans will be cheaper than paying rents.
This was announced after the RBI lowered policy rates for the second time in two months. He further said that banks review their Marginal Cost of funds based Lending Rate, the floor at which they extend loans, every month.
The RBI has reduced the repo rate by 25 basis points. Borrowings will become cheaper by a lower interest rate regime, for homebuyers, which can generate consumer demand that will boost economic growth.
Under Atal Bihari Vajpayee leadership, whose government introduced income tax deductions attributable to interest payments on housing loans, lowering the cost of borrowing and giving a boost to housing demand was the example cited by Jaitley.
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