RBI Hikes Home Loans Interest. Act Now
Home loans provide 80 percent of the value of the respective property and this makes homebuyers to achieve their dream of owning home come true. On June 6th 2018, Reserve Bank of India (RBI)’s Member Monetary Policy Committee, which is responsible for fixing standard interest rate in India has announced that it has hiked its Repo Rate by 25 basis points. This Hike has happened after four years from now in January 2014, due to the rise in the inflation in the last few months followed by rise in the Crude Oil, Petrol, Diesel prices and other macroeconomic factors.
What is Repo Rate ?
Repo Rate is the rate at which the Reserve Bank of India lends money to all commercial banks if the banks experience shortfall of funds. RBI increases the repo rate basis points with the purpose to control inflation and to revive the economy from time to time.
Now how it has Impact on Home Loans ?
This will have an impact on our EMI home loan interest. The Hike of 25 basis points of Repo Rate reflects 0.25 Percent increase in the Interest of the Home Loan. When the RBI increases the repo rate to the banks, the banks directly pass this burden on the borrowers or customers. This may have direct impact on the borrowers of the home loan as there may be a increase in the home loan interest of 0.25 percent in coming days of time on new borrowings but not on the existing home loans.
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Source: Economic Times
