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<div type="image" title="In case RBI is in the mood to hike the interest, your home loan EMIs might end up taking more from your pockets. Or, if it leaves the rates unchanged, your EMIs wont budge one bit" msid="114284206" hostid="261" caption="&amp;lt;p&amp;gt;In case RBI is in the mood to hike the interest, your home loan EMIs might end up taking more from your pockets. Or, if it leaves the rates unchanged, your EMIs wont budge one bit&amp;lt;/p&amp;gt;"></div><br />On September 18, 2024, the <keyword id="19951097" type="General" weightage="20" keywordseo="us-fed" source="keywords">US Fed</keyword> delivered a jumbo-sized surprise to the global economy. Not only did they trim their interest rates by a massive 50 basis points to bring their yields down to 5%, but also hinted at further rate cuts in the upcoming months. This move from the fed and several other central banks globally had pushed expectations high for a similar rate slash closer home, from the <keyword id="19899808" type="General" weightage="100" keywordseo="rbi" source="keywords">RBI</keyword> this month.<br /><br />But governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword>, in a <em>“picture abhi baaki hai” </em>moment, decided to hold the repo rates here steady, leaving them unchanged at 6.5% for the record 10th straight time. Although, he did tinker with the policy stand, changing it from “<em>rate cuts are absolutely off the table</em>” to a more accommodating “<em>we’re okay with bringing down the rates, if needed</em>”.<br /><br />This, rather neutral, stance from India’s financial custodian sparked hopes for a rate cut in December this year. However, the stubborn <keyword id="22195" type="General" weightage="20" keywordseo="inflation" source="Orion">inflation</keyword> levels in September have again dented such hopes.<br /><br />As consumers, you may be wondering what all the hullabaloo this is about, since it hardly makes a difference to your regular financial routine. Well, the majority of both economic growth and inflation is closely connected to this policy stance from the central bank and it does have a rather indirect effect on both our earnings and spending.<br /><br />But more directly, it would have clear implications for those looking to own a house. Even the slightest modification of interest rates, or the lack of it, influences the <keyword id="19916018" type="General" weightage="20" keywordseo="emi" source="keywords">EMI</keyword> you pay significantly.<br /><br />So, all aspiring homebuyers, is this the right time to take out a loan and buy a house? Can you expect a rate cut anytime soon, and what will that mean for your home-owning dreams? We lay it out.<br /><br /><h2>What’s the connection?</h2>You see, buying a house is no small feat, at least financially. The task becomes even more herculean if you are scouting for your own roof in cities like Delhi, Noida, Bangalore or Mumbai where, as Circuit from Munnabhai says, “<em>room shuru hote hi khatam ho jata hai”.</em><br /><br />Naturally, you’ll have to take a <keyword id="6354730" type="General" weightage="20" keywordseo="Home-loan" source="Orion">home loan</keyword> from the bank. Don’t be mistaken, the bank won't give you a loan that covers 100% of the value of the property you want to own. Rather, your loan amount will be equivalent to a certain percentage of the property’s total value. RBI’s guidelines on this are pretty clear: <br /><br /><ul><li>If your loan amount is up to Rs 30 lakh, you can get a loan worth 90% of the property’s value.</li></ul><ul><li>If the loan amount is between Rs 30 lakh and Rs 75 lakh, you are eligible for a loan worth 80% of the property’s value. </li><li>If you are taking a loan of more than Rs 75 lakh, your loan amount will be equivalent to 70% of the property’s value. </li></ul>Now assuming that you have the money, it's all about paying back the principal amount, but not without a little (read hefty) interest added on top. See, when you’re taking a home loan, you are actually signing up for a long-term, even multi-decadal financial commitment, which will unfailingly present itself to your bank accounts and finances every single month, in the form of EMIs, or equated monthly instalments). <br /><br />When you take a home loan, you can choose to pay the interest in two ways (talk about choices!). One is that you decide to keep a fixed rate of interest throughout the tenure of your home loan. <br /><br />So, if you opt for a 25-year fixed-rate home loan at the rate of 8.8% p.a., you’ll have to pay interest at this rate for the next 25 years, till your entire loan is paid off.<br /><br />Yes, you can go backsies and switch to a floating-rate home loan by paying a fee. Floating, as the name suggests, means that your interest rate is not set in stone. But starting October 2019, when it comes to a floating interest rate home loan, your payable interest and EMIs are directly impacted by any changes in <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword>, which were left unchanged by RBI this time around. <br /><br />Why are these two so chummy, you might ask. Well, <keyword id="173069" type="General" weightage="20" keywordseo="Home-loan-interest" source="Orion">home loan interest</keyword> rates are a sum of two things:<br /><br /><ol><li>Repo Rate (the rate at which RBI lends money to banks)</li><li>Operational cost + margins</li></ol>Any plus or minus in this equation would send your home loan interests tanking, or skyrocketing. Vivek Iyer, Partner, Grant Thornton Bharat explains that any change in the repo rates impacts the cost of funds and thereby the home loan interest rates.<br /><br /> “When the interest rates are expected to reduce, the corresponding impact will be in the form of a reduced EMI. Home loan borrowers should always try to borrow at a floating rate when interest rates are expected to reduce and at a fixed rate when the interest rates are expected to increase. This minimizes the outflow in the form of EMIs that the home loan borrowers will experience”, he continues. <br /><br />So, no change in repo rates means no change in your home loan interest payout and no financial relief whatsoever. A rate cut, which most experts are anticipating will start this December, would mean your EMI payments come down, and your wallet might save a little more. <br /><br />But there’s also a chance of an UNO reverse happening. In case RBI is in the mood to hike the interest, your home loan EMIs might end up taking more from your pockets. <br /><br />Consider this. You took a floating interest rate home loan worth Rs 50 lakh in January 2022 at 8% p.a., for a period of 20 years. This brings your total monthly EMI to Rs Rs 41,822. <br /><br />But, as luck would (or won't) have it, RBI raised the interest rate by 250 basis points between May 2022 and February 2023, bringing it to its current status of 6.5%. Some back-of-the-envelope calculations suggest that now, your home loan interest payout will also rise by a hefty 2.5%, taking the total to 10.5%.<br /><br />In other words, you’ll have to dish out Rs 49,919 per month as EMI. <br /><br />Now, won't you heave a sigh of relief if the RBI were to bring down the interest rate by say, even 50 basis points, or 0.5%? Agreed, your EMI will come down just marginally, to Rs 48,251. But look at this over a 20-year period, and you’ll see how big the difference is.<br /><br /><h2>Are rates set to change anytime soon?</h2>Generally, RBI hikes the repo rates if it sees inflation spiralling out of control. Then, in a bid to reduce consumer spending, it raises interest rates to make borrowing expensive. <br /><br />But when the apex bank sees sluggish consumption in the economy, inflation in control and wants to boost spending, it slashes down on interest rates, making it more lucrative for people to borrow. <br /><br />As of now, most experts are not anticipating any changes in the interest rates anytime soon. This means home loans are not getting cheaper anytime soon.<br /><br />The CPI data, which came out yesterday, saw inflation rise to 5.49% in September, compared to 3.65% last month. Food and beverage prices jumped to a four-month high of 8.36% in September, as opposed to a 5.3% rise in August. So a rate cut seems a no-go at the moment! <br /><br />Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities explains that the RBI had probably expected a hardening of inflation and that's why it chose to hold on to the rates in the monetary policy announcement last week.<br /><br />“Now, it seems that RBI will take a cautious stance going ahead and will not be in a hurry into rate cuts like its global peers”, he added. <br /><br />In all this, one thing is clear, in the grand movie of the Indian economy, the RBI has chosen stability over drama. And just like in every good Bollywood film, we're left wondering what twist the sequel will bring. Until then, it might be “The End" for rate cuts, but the show must go on for the Indian economy!<br /><br />

Simply Put: Boom or bust — how RBI’s decision to leave rates unchanged affects homebuyers

<keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>'s <keyword id="23127366" type="General" weightage="20" keywordseo="consumption-loan" source="Orion">consumption loan</keyword> portfolio grew by 15.2% year-on-year (YoY) to Rs 90.3 lakh crore as of March 2024, according to the latest <keyword id="6354680" type="General" weightage="20" keywordseo="credit" source="Orion">credit</keyword> bureau report. The fourth edition of the CRIF High Mark report noted a slowdown from the 17.4% growth recorded in March 2023, largely due to a deceleration in the home <keyword id="6362287" type="General" weightage="100" keywordseo="loans" source="Orion">loans</keyword> segment, which accounts for 40.1% of the overall consumption loan portfolio by value. <br /><br />The home loans portfolio saw growth slowing down to 7.9 % YoY in FY24, from the 23 % expansion seen in FY23. This was mainly due to muted growth in "originations", which increased by 9.2 % in FY'24 compared to 18.2 % in the previous fiscal year. <br /><br />Origination refers to the process by which a lender creates or initiates a new loan or credit, including evaluating, processing, and approving a borrower's application. The report finds a shift toward higher <keyword id="6871589" type="General" weightage="20" keywordseo="ticket-size" source="Orion">ticket size</keyword>s, with a growing preference for loans above Rs 35 lakh, although the average ticket size (ATS) rose by 32% from Rs 20.1 lakh in FY20 to Rs 26.5 lakh in FY24. <br /><br />In contrast, the personal loans segment maintained strong momentum, growing by 26% YoY in FY24, despite recent regulatory reforms. Larger ticket loans of Rs 10 lakh and above increased their share in originations by value, while loans under Rs 1 lakh continued to dominate in volume. <br /><br />Banks led in value-based originations, whereas non-banking financial companies (NBFCs) remained dominant in volume. Two-wheeler loans experienced a 34% YoY growth in FY24, up from 30% in FY23, fueled by a shift to higher ticket-size loans. However, the overall volume of originations grew at a slower pace of 13% in FY24 compared to 32% in FY23. <keyword id="35527" type="General" weightage="20" keywordseo="auto-loans" source="Orion">Auto loans</keyword>, on the other hand, grew by 20% YoY in FY24, compared to 22% in FY23. <br /><br />Consumer durable loans posted a robust growth of 34% YoY in FY24, up from 26% expansion in the previous fiscal. This growth was driven by a shift to larger ticket sizes, although origination volumes grew by only 8.5% in FY24, compared to 38.2% in FY23. <br /><br />The MSME lending segment displayed mixed results, with individual MSME loans growing faster than entity MSMEs. The individual MSME portfolio increased by 29% YoY in FY24, accelerating from 15% in FY23, while entity MSME loans grew by just 6.6 % YoY, a sharp slowdown from 17.2 % in the previous year. <br /><br />Microfinance lending also saw strong growth, with the portfolio rising by 27% YoY in FY24, compared to 21% in FY23. <br /><br />"The resilience of the Indian credit market is evident in the strong performance across various lending categories and the stability in delinquencies. Home loans remain dominant, but the growth in personal loans, two-wheeler loans, and the rebound of NBFCs highlight significant shifts in the lending landscape," CRIF High Mark MD Sanjeet Dawar said.

Consumption loan portfolio expands 15% to Rs 90 lakh crore in FY24, notes CRIF report

<p class="headline-regular financial-disclaimer">Our experts answer readers' home-buying questions and write unbiased product reviews (<a href="https://www.businessinsider.com/personal-finance/how-we-evaluate-mortgage-lenders" class="not-content-link" target="_blank">here's how we assess mortgages</a>). In some cases, we receive a commission from <a href="https://www.businessinsider.com/personal-finance/our-partners" class="not-content-link" target="_blank">our partners</a>; however, our opinions are our own.</p><ul class="summary-list"><li>Homebuying assistance specific to teachers includes the Teacher Next Door, Good Neighbor Next Door, and Homes for Heroes programs.</li><li>But educators may find similar or even better assistance using programs available to all buyers.</li></ul><p>Getting a mortgage as a teacher can be tough, particularly if you still have student loan debt to pay off. Fortunately, there are programs to help make buying a home possible.</p><p>Whether you're looking for down payment assistance, lender discounts, or more lenient credit requirements, there are plenty of options available to help teachers achieve their homeownership goals. Here's what to know about the Teacher Next Door program and other programs or home loans for teachers.</p><h2>Are there home loans for teachers?</h2><p>Teachers who are looking to become homeowners have a wide array of options available to help them, including both teacher-specific programs and more general <a href="https://www.businessinsider.com/personal-finance/best-first-time-homebuyer-loans">first-time homebuyer loans</a>. </p><p>Some teacher-specific homebuyer assistance includes Teacher Next Door, Good Neighbor Next Door, Home for Heroes, or benefits through your teachers union. Your state or city may also have homebuyer programs specifically geared toward teachers. Check your local housing authority's website to see what's available to you.</p><p>But you may have better luck looking at <a href="https://www.businessinsider.com/personal-finance/mortgages">mortgages</a> available to all borrowers, regardless of profession. There are more of these programs available, and many of them come with bigger benefits than what you'll find with some profession-specific programs.</p><h2>How does the Teacher Next Door program work?</h2><p><a href="https://www.teachernextdoor.us/Home" target="_blank" rel="noopener">Teacher Next Door</a> is a program for homebuyers that's available to teachers as well as other school personnel, including administrators, office staff, lunchroom workers, custodians, and paraprofessionals.</p><p>"Affordable housing is a major concern for everyone, including teachers," says Stephen Parks, the national director of the <a href="https://www.nextdoorprograms.us/" target="_blank" rel="noopener nofollow">Next Door programs</a>, which includes Teacher Next Door. "Many times, the grants and other assistance we provide is the difference maker in a purchasing new home for their family."</p><p>Through this program, eligible professionals can get a grant of up to $8,000, which doesn't have to be repaid. Teacher Next Door will also help connect you to local down payment assistance programs and says participants can get as much as $10,681 in down payment assistance.</p><p>Teacher Next Door is sometimes confused with the Good Neighbor Next Door program, which is overseen by the US Department of Housing and Urban Development. But these are two completely separate programs.</p><p>"The Teacher Next Door Program is much more inclusive and flexible than the Good Neighbor Next Door Program, since you may purchase any home on the market, not just in revitalization areas, and there are no minimum residency restrictions," says Parks.</p><p>To get a grant and down payment assistance through Teacher Next Door, you'll need to work with a real estate agent who's affiliated with the program and one of the program's preferred <a href="https://www.businessinsider.com/personal-finance/best-mortgage-lenders">mortgage lenders</a>.</p><p>If you're considering buying a home through the Teacher Next Door program, it's a good idea to also get your own <a href="https://www.businessinsider.com/personal-finance/average-mortgage-interest-rate">mortgage rate</a> quotes from other lenders to be sure you're getting a good deal. </p><h3>Teacher Next Door program income limits</h3><p>The Teacher Next Door program doesn't have any income limits. However, if you have a higher income, you might not qualify for some of the local down payment assistance programs that Teacher Next Door connects you with. </p><h2>Good Neighbor Next Door program for teachers</h2><p>The <a href="https://www.businessinsider.com/personal-finance/good-neighbor-next-door-program">Good Neighbor Next Door program</a> offered through HUD lets public servants buy a home at a 50% discount in certain areas. Teachers are eligible for the Good Neighbor Next Door program.</p><p>The catch is that the inventory for this program is extremely limited. Not all homes are eligible — it has to be a HUD-owned <a href="https://www.businessinsider.com/personal-finance/how-to-buy-a-foreclosed-home">foreclosed home</a> in a designated "revitalization area," which are areas that are lower income and have low homeownership rates. As of December 2023, there were only four homes in the entire country that were eligible for the GNND program, according to <a href="https://www.hudhomestore.gov/" target="_blank" rel="noopener">HUD's website</a>.</p><h2>Homes for Heroes program for teachers</h2><p>Homes for Heroes offers homebuying discounts to teachers and other public service professionals. According to its website, program participants save an average of $3,000 with Homes for Heroes.</p><p>To save money with the Homes for Heroes program, you'll work with homebuying professionals who are affiliated with the program. For example, working with a Homes for Heroes-affiliated <a href="https://www.businessinsider.com/personal-finance/how-to-find-real-estate-agent">real estate agent</a> could save you $700 for every $100,000 of your home's purchase price. You'll get your discounts in the form of a check after closing.</p><h2>Teachers union mortgage benefits</h2><p>If you belong to a union, you may want to see if it offers discounts with any mortgage lenders or other types of homebuyer assistance.</p><p>For example, the American Federation of Teachers has a mortgage program through Amalgamated Bank that includes a discount on your <a href="https://www.businessinsider.com/personal-finance/what-is-an-origination-fee">origination fee</a>. AFT members can also get discounts on professional movers or truck rentals.</p><h2>Low-down-payment home loans for teachers</h2><p>There are a variety of low- or <a href="https://www.businessinsider.com/personal-finance/how-to-buy-a-house-with-no-money-down-home-loans">no-down-payment home loans</a> available to borrowers, including both conventional and government-backed options.</p><h3>Conventional loan</h3><p>When you get a mortgage that isn't backed by a government agency, it's called a <a href="https://www.businessinsider.com/personal-finance/conventional-mortgage">conventional mortgage</a>. Borrowers can get a conventional loan with a down payment as low as 3%.</p><p>However, this might not be the best option for you if your credit isn't great, since lenders typically have stricter standards for conventional loans. You'll need at least a 620 <a href="https://www.businessinsider.com/personal-finance/what-credit-score-is-needed-to-buy-a-house">credit score</a> to qualify for one of these mortgages.</p><p>If you have a lower score, you might want to consider your <a href="https://www.businessinsider.com/personal-finance/government-home-loans">government-backed mortgage</a> options.</p><h3>FHA loan </h3><p><a href="https://www.businessinsider.com/personal-finance/fha-loan">FHA loans</a> are backed by the Federal Housing Administration, and they're geared toward first-time and low-income homebuyers. </p><p>FHA loans have less stringent credit requirements; you can get one of these mortgages with a score as low as 580 with a 3.5% <a href="https://www.businessinsider.com/personal-finance/how-much-down-payment-for-a-house">down payment</a>, or 500 if you can put 10% down.</p><h3>VA loan</h3><p>To be eligible for a <a href="https://www.businessinsider.com/personal-finance/va-loans">VA loan</a>, you'll need to be a veteran or current servicemember who meets minimum service requirements. You'll also generally need at least a 620 credit score, though it varies depending on your lender.</p><p>If you qualify for a VA loan, you'll be able to get a mortgage with 0% down.</p><h3>USDA loan</h3><p>Mortgages backed by the US Department of Agriculture are geared toward borrowers buying in rural areas, though some suburban areas also meet the USDA's requirements. These mortgages also require no down payment.</p><p>To qualify for a <a href="https://www.businessinsider.com/personal-finance/usda-loan">USDA loan</a>, you'll typically need at least a 640 credit score.</p><h2>First-time homebuyer loans and down payment assistance for teachers</h2><p>Many of the <a href="https://www.businessinsider.com/personal-finance/best-mortgage-lenders-first-time-buyers">best mortgage lenders for first-time buyers</a> have their own unique programs that come with features and benefits that make homeownership more accessible to borrowers. This includes things like low down payments, down payment or closing cost grants, or flexible credit requirements.</p><p>These products aren't unique to teachers, though they often do come with income or geographical limits.</p><p>As you search for a lender, ask about any affordable loan options they offer.</p><p>For example, <a href="https://www.businessinsider.com/personal-finance/chase-mortgage-review">Chase Mortgage</a> has a loan called the DreaMaker Mortgage. It allows 3% down payments, reduced private mortgage insurance costs, and flexible credit requirements. This mortgage can also be combined with the bank's Homebuyer Grant, which offers up to $5,000 in down payment or closing cost assistance. Many other major mortgage lenders have similar programs.</p><h2>Home loans for teachers FAQs</h2><h3 class="faq-question">Is the Teacher Next Door program legit?</h3><p class="faq-answer">The Teacher Next Door program is a legitimate homebuyer program that can help teachers and other school personnel who are buying a home get grants and down payment assistance. </p><h3 class="faq-question">Is the Teacher Next Door program good?</h3><p class="faq-answer">Teacher Next Door could be a good option to help you become a homeowner — but there are a wide array of homebuyer assistance programs out there, so it's a good idea to explore your options first. With the Teacher Next Door program, you'll be limited to working with a lender affiliated with the program, which might not be ideal if you can get a lower rate from a different mortgage lender.</p><h3 class="faq-question">Do teachers get a better mortgage rate?</h3><p class="faq-answer">You might be able to get a discount on your mortgage through your teachers union or a credit union that offers special rates to educators. Check with local lenders in your area to see what's available to you.</p>

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Simply Put: Boom or bust — how RBI’s decision to leave rates unchanged affects homebuyers

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Consumption loan portfolio expands 15% to Rs 90 lakh crore in FY24, notes CRIF report

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