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Repo Rate Increase Again By RBI: The Reserve Bank of India (RBI) may once again increase its policy repo rate. Recently, RBI has increased the repo rate by 25 basis points on 8 February 2023, but has left the scope to increase it further in the coming months. In simple words, now the interest burden on the loan from the bank may increase further. This news can increase the problem for home loan borrowers. Because if there is any increase in the repo rate from RBI, then it will lead to an increase in the installment (EMI) of the home loan. Right now the repo rate from RBI is at 6.5 percent. Which has just reached after increasing from RBI in the month of February. Know what are the complete details…
Will not increase more than 50 bps
According to Moneycontrol, RBI is continuously increasing interest rates from May 2022. The reason behind this is to control inflation. In the coming months of this year, we expect an overall growth of 25-50 bps. Therefore, it will not be as bad as last year 2022 and may increase in small installments during this year. Although it is a good thing that this year it will not exceed 50 bps.
EMI increased by 20-25 percent so far
When the repo rate of RBI was running at 4 percent, most of the banks were lending around 6.5 percent or so. Hence for a loan with an interest rate of 6.5 per cent and a tenure of 300 months, the EMI was as low as Rs 675 per Rs 1 lakh loaned. But now the interest rate in many banks has gone up to 8.85 per cent. EMI per lakh has increased to Rs 825. EMIs are witnessing an increase of 20-25 per cent, which is a big blow to existing home loan borrowers.
Burden will increase on new home buyers
If your salary is X and you were eligible for a loan of Rs 50 lakh, you are now eligible for a home loan of Rs 37-38 lakh only. Your purchasing power is already less. Now the cash flow with the people has reduced. People who really want to buy a house will have to put in more extra efforts to raise the required funds. That means more downpayment will have to be given. Those who are planning to buy a new house may have to postpone their decisions now. If they are only looking at interest rates, they will start coming down in 15-18 months from now.
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