I appreciate the fact that banks are trying best to boost the economy by giving housing loans at a cheaper rate. Currently people are holding back to their cash under market apprehension. This hurts the economy. Fundamentally banks are doing a good thing by providing opportunity for movement of cash within the market. I hope this works and make more people to buy houses and there by helping GDP growth.
But!!! what about the current housing loan holders? Shouldn't bank do something to ensure even such a set of people need to be taken care by the system. If bank lowers the interest rate for existing customers, that will mean customers have more money to spend and hence will help to boost the economy by utilising that money in some other space. Banks will anyway increase the interest rate when economy bounces back. So then why not reduce the interest rate on existing loan!!!
1 comment:
I would say that the banks are trying to extract some money from unwilling customers by showing them a lower interest rate.
It doesn't help the bank's pocket by reducing for people who are already stuck with them.
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