New Delhi: The Reserve Bank of India’s fourth interest rate hike in five months will spike equated monthly installments (EMIs) for individual borrowers and could impact consumption and demand for loans
The latest repo rate hike, aimed at reining in inflation, will make all borrowings, home loans included, more expensive. Several banks, led by SBI have already hiked lending rates, a report by Times of India said.
The report said for those who took home loans before the May 4, 2022 rate hike, this is a major shock. Banks that had pushed rates to 6.6% will now re-price the loan at 8.5%. Borrowers who don’t have room to extend tenure will see EMIs rise by 15%.
RBI governor Shaktikanta Das, announcing the increase in the repo rate to 5.9%, hinted more rate hikes were to come. He said that after adjusting for inflation, the repo rate continues to trail 2019 levels.
RBI governor Shaktikanta Das said on Friday that after adjusting for inflation, the repo rate continues to trail 2019 levels. The rate hike was widely anticipated as the RBI is the latest among the central banks worldwide that have followed in the footsteps of the US Fed, which hiked interest rates by 75bps (100bps = 1 percentage point) on September 21.
“Consumer price inflation remains elevated and above the upper tolerance band of the target due to large adverse supply shocks, some firming up of domestic demand, and the spillovers from global financial markets,” TOI quoted Das further saying.