HOME_BUYERSBy Balaji Rao: With the drop in domestic fuel prices signalling a drop in inflation, it may also signal a softening of interest rates. Industries are hoping that in the next fiscal policy (due December 2) the RBI will finally start taking a lenient stance and bring interest rates down. This could definitely prop up various segments, significantly real estate. If funds get cheaper, banks and financial institutions will be able to lend money at lower rates, which would increase credit offtake by the housing segment and encourage new property purchases by individuals.

Borrowers who have been reeling under the high EMI regime of the last few years could breathe easy. Some banks and HFIs have already brought down lending rates on home loans to as low as 10 per cent, which has spurred the demand for loans.

Lower EMI outflows would also result in higher savings, which could help consumption levels, leading to overall economic growth and recovery. A note of caution: the RBI might consider the latest drop in inflation as a one-off thing, and may not be in a hurry to tinker with key policy rates. The central bank may wait another quarter to see if inflation continues to behave.

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