Hyderabad: The RBI’s announcement of 40 basis point cut to the repo rate comes as a breather to individuals and households amid steady rise of COVID 19 positive cases, extended lockdown, job losses and salary cuts.
There has been a constant price rise in almost all food items, which is enough to disturb the household expenses.
Quoting data provided by the National Statistical Office (NSO) the RBI Governor Shaktikanta Das on Friday said, “From the incomplete data that have been made available, food inflation, which had eased from its January 2020 peak for the second successive month in March, suddenly reversed and surged to 8.6 per cent in April as supply disruption took their toll”.
Rising electricity bills because of the scorching summers have already increased the pressure on household incomes. With more people staying indoors and a large section of professionals working from home, the bills have only compounded.
Essential expenditures have also gone up, with medical bills, internet bills and others compounding people’s woes.
Personal finance experts have welcomed RBI Governor’s announcement of extension of loan repayment moratorium for three more months as well as reduction of repo rate by 40 basis points, from 4.4% to 4%.
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“This cut will lower interest rates, which will help individuals availing home loans, vehicle loans, gold loans, etc. For example, if an individual was paying home loan premium at 8.5%, now it will be reduced to 8.1%. This will save some money spent on the premium and thereby people will have some more money in pocket”, says personal finance expert Sai Krishna.
Anuj Puri, Chairman, ANAROCK Property Consultants, has made similar observation.
“Beyond doubt, repo rate cuts do uplift the sentiments of home buyers even further. Home loan interest rates have already gone down substantially over the last year, and are presently at an all-time low averaging between 7.15% to 7.8%”, Anuj Puri said.
But there is a note of caution from the expert as well.
While on availing the extension of moratorium benefits for three more months till August, Sai Krishna advises to “avail the benefit only and only when one is in a very dry financial situation. Job loss or salary cuts are ugly realities these days. So, it is advisable to pay the premiums if one can. It will only help one to keep a check on personal finances and plan judiciously for the future as the days ahead are full of economical and health uncertainties”.
“Any loan repayment, eventually is a compounding burden. If one can repay, the person should always decrease the financial burden, rather than extending it by stretching it further. One has to remember that it is only a moratorium, not a waiver”, he added.
(ETV Bharat Report)
