Why have leaders said this would not create a hard demand for new loans? Those who borrowed when interest rates were at rock bottom in April 2022 may feel the pain as lenders ask for an increase in EMI to ensure that monthly payments exceed the interest outgo.
The RBI lowered the growth forecast for the current year to 6.8% from 7% a year earlier and retained inflation projections at 6.7%, saying that despite this, India would be among the fastest-growing economies in the world.Announcing the rate hike, Das said the worst was over as far as inflation was concerned, but the battle is yet to be won. Many see this as the ultimate rate hike as inflation next year is expected to be below 6%.
source : The economic times The MPC voted 5:1 to increase the repo rate by 35 basis points, with external member Jayant Verma being the sole dissenter. RBI lends to banks at the repo rate, which is now used as a benchmark for all retail loans.To date, most banks have fully passed on the repo rate increase of 190 basis points to home loan consumers. The 190 BBS increase resulted in a loan increase of around 10 years for someone who had initially agreed to a 20-year loan term, assuming that her home loan was purchased at 6% at the time.Small home loan borrowers from the unorganized segment who raised loans at 10 to 11% for a long duration will be particularly hit, as their original EMI could not be enough to cover the interest and borrowers would demand more, but banks are not seeing any stress among borrowers yet as interest rates are still below the 10-year average.What are your views on this hike in the Repo Rate ?
