7th Pay Commission Latest News: Central Government Employees have only 3 months left to fulfill their dreams of a home by taking home loans cheaply. It is possible that in the new financial year 2023-24, the government will increase the interest rates on Housing Building Advance for central employees.
Housing building advance interest rates set to rise
In the last 8 months, RBI has announced to increase the repo rate five times. The repo rate was increased from 4 percent to 6.25 percent. As a result, banks and housing finance companies increased the interest rates on new home loans, but the EMIs of home buyers who had already taken home loans became costlier. Home buyers had to either increase the EMI amount or extend the loan tenure. After making RBI loans costlier, it is believed that in the new financial year, the central government may increase the interest rates on housing building advance given for the purchase of houses for central employees.
Central employees get loans at the rate of 7.%
At present, central employees get housing building advance at the rate of 7.1 per cent for buying or building a house. For 2022-23, the Ministry of Urban Development has fixed the housing building advance interest rate at 7.1 percent. For central employees in 2021-22, where the interest rate on housing building advance used to be 7.9 percent. But now after increasing the repo rate of RBI, the interest rates on home loans have increased from 8.65 to 9.25 percent. In such a situation, the increase in the interest rate of housing building advance is believed to be fixed. The central government fixes the interest rate on housing building advances based on the yield (return) of 10-year government bonds.
Housing Building Advance Rules
According to the recommendations of the Seventh Pay Commission and the Housing Building Advance 2017 Rules, central government employees can take up to 34 months’ basic pay or a maximum of Rs 25 lakh as advance for building or buying a house. According to the Housing Building Advance rule, the principal of the loan has to be repaid in 180 EMIs in the first 15 years, then the interest on the loan has to be paid in 60 EMIs in five years. Housing Building Advance can also be taken to repay the home loan taken from the bank.
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