The government is likely to raise the qualification bar (from `10 lakh to `15 lakh) for availing a one per cent interest subvention (interest subsidy) on the existing rate, a move that will prove to be a Diwali bonanza for millions of middle-income people who have taken long-term home loans on floating rates.
A decision to this effect, if taken at the meeting of the Union Cabinet on Tuesday, will reduce the burden on the common man at a time when the RBI is on a quarterly spree of hiking interest rates to manage inflation.
Sources in the government said, “The Union Cabinet, at its meeting on Tuesday, which will be chaired by Prime Minister Manmohan Singh, is likely to clear a proposal to provide one per cent interest subvention on housing loans up to `15 lakh with the cost of the house not exceeding `25 lakh.”
Currently, the one per cent interest subvention is given on housing loans up to `10 lakh with the cost of house not exceeding `20 lakh.
Though the proposed hike in the benchmark was announced in the Budget speech of finance minister Pranab Mukherjee this year, final approval was kept pending till now against the backdrop of soaring inflation, sources said. “But since a substantial increase in the interest rate has been effected by the RBI, and people with moderate incomes are getting trapped in their long-term home loans, the government has decided to give some relief to such home buyers,” they added.
In his Budget speech, Mr Mukherjee had said, “To further stimulate growth in the housing sector, I am liberalising the existing scheme of interest subvention on one per cent by extending housing loans up to `15 lakh, where the cost of the house does not exceed `25 lakh, from the present limit of `10 lakh and `20 lakh respectively.”