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Impact of Monsoon on Your Home Loan Interest Rates





Letâs get the basics clear first. What does a particular season have to do with loans and a countryâs economic growth? Well, quite a lot. For the economy to be stable, it is necessary that inflation is in control. Simply put, if prices of essential commodities shoot up but citizens are earning what they used to earlier, it means that people will have less spending capacity.

This, in turn, will lead to an unstable economy where products are available, but people donât have the money to buy them. So how do we ensure that inflation is stable? By ascertaining that the demand-supply curve is stable. In a nutshell, products should be available at reasonable rates for people to buy them. When people go out and buy, the economy of the country grows.

Impact of Monsoon on Overall Economy

Now, India is a primarily agrarian community, meaning that a large part of our economy depends on agriculture. We are quite self-sufficient in terms of growing food and even export some of it to other countries. But this is entirely dependent on a good monsoon. Good rains ensure a good yield of crops. The prices of crops, therefore, stay stable; which means no inflation, and people can still pay for these goods at earlier rates. A bad monsoon, on the other hand, yields fewer crops than required by the market, so prices of crops go up which results in inflation and people suffer because their income has not increased.

Impact of Monsoons on Home Loan Interest Rates

When you take a home loan from a bank, you are charged a certain interest. This amount is deposited with the bank and adds to the wealth corpus that the country has. If prices of products go up, the bank could possibly cut interest rates of loans so that people can pay less to the bank. Also, with that extra amount in hand, they can buy the more necessary items. Basically, inflation is not good for anybody â prices of products go up, peopleâs expenditure goes up and if banks try to help by cutting interest rates, their incomes go down.

The current global pandemic has thrown all major economies under the bulldozer and countries are struggling to keep their economies stable. Mass unemployment and salary cuts across many sectors have left a large part of the population with very little to spend and the Central Bank has decided to boost consumer morale by slashing interest rates. Home loan interest rates are at a 15-year low and you can get home loans for as little as 7.25%.

Why any of these should interest you?

If you put all of the above points together, you will realise that this is a good time to invest in a house at a lower interest rate. The rates are possibly going to remain low if the monsoons are great, but there is no guarantee of that. Since the housing loan interest rates are already low and real estate developers have had fewer sales in the last few months, you will get great properties at the most competitive prices.
About Author Wilson Fernandes :

<a href="http://www.apnapaisa.com" target="_blank">apnapaisa.com</a>


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Article Added on Friday, July 24, 2020
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Other Articles by Wilson Fernandes

How Important is Home Loan Insurance
When you zeroed in on that dream house and decided to buy it, little did you know how much paperwork and additional costs would come into the picture. You probably thought that the price quoted by the seller was all that you needed in your account. And then you found out about stamp duty and registration charges and your budget went up by a few lakhs. Now that you are on the verge of finalizing your home loan, your bank is asking you to add a home loan insurance to it. Another added...

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