RBI monetary policy: Rate hike is likely to push home loan rates higher, EMIs may get costlier6 min read . Updated: 05 Aug 2022, 02:21 PM IST
- In the past two policies, RBI has hiked the repo rate by 90 basis points. Many banks have raised their home loan rates from May to July this year. The majority of the lenders have linked their lending rates to repo rate.
All eyes are now set on RBI's bi-monthly monetary policy on Friday. RBI is expected to continue raising the repo rate to tame CPI inflation which stays above its comfort zone for six consecutive months. With a rate hike case on the tables again, its impact will also be seen in borrowers' term loans including home loans. Generally, when RBI hikes the repo rate it increases the cost of funds for lenders like banks. A rate hike means banks will have to pay more for the money they borrow from RBI. As a result, banks pass on the cost to borrowers by increasing their own interest rates on loans which makes equated monthly instalments (EMIs) costlier. Both new and existing borrowers are likely to witness an increase in their home loan interest rates.
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