The lower risk weightage reduces the cost of lending to banks, enabling them to pass on the benefits to customers. In metros, thanks to high property prices, only around 15-20 per cent of the total number of home loan disbursements fall in the Rs 20 lakh bracket. With the limit raised to Rs 30 lakh, this percentage will go up, and a significantly greater number of customers will be able to reap the benefits of lower loan rates.

Multinational real estate consulting firm CB Richard Ellis’ managing director Anshuman Magazine said, “It is a good move. But considering the way real estate valuations have gone up, I think the limit should have been raised to Rs 40 lakh to cover a larger number of beneficiaries.”

In a scenario where homebuyers are facing the double-edged sword of rising interest rates and increasing property prices, the move will offset the impact of higher interest rates (due to the hike in CRR to 8.25 per cent from 8 per cent), at least for priority-sector borrowers.