The borrowers may celebrate the New Year 2008 with great joy because the interest rates on home and consumer loans are likely to go down from the second quarter onward. However, the increasing fuel and commodities prices might spoil the celebration at some extent.

According to financial analysts, with high interest rates and low deposit rates, consumers could be blessed with low interest rates in 2008 because the Reserve Bank of India successfully managed to keep the roaring inflation rate low for almost the whole year without upsetting country’s economic growth.

Union Bank of India Chairman and Managing Director M V Nair said:

The margins were a bit edgy in 2007 but now banks have started reducing deposit rates. With RBI’s objective to keep inflation rate near three per cent in the medium term, interest rates are likely to come down in 2008.

Yes Bank Managing Director & CEO Rana Kapoor also said felt a 0.5 per cent reduction in interest rates was on the card in the next fiscal starting April. According to the report, the RBI has raised the interest rates on six occasions in the past 18 months. The banks’ also raised the mandatory cash deposits or Cash Reserve Ratio by 2.5 per cent since December 2006 to 7.5 per cent to restrict the inflation rate within limit.

Later, banks raised interest rates on home loans, auto loans and personal loans as well in line with such measures. The report says that the floating home loan interest rates range at present from 10-11.5 per cent and the fixed rates are two-three percentage points more than floating rates.

On the other hand, the crucial assembly elections in Gujarat and Himachal Pradesh are over and now the UPA Government may raise fuel prices this month. So, at the end of the day, the consumers will have similar days what they had in the year 2007.

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