RBI Policy Rate Hike to Immediately Pinch Retail Customers
The increase is the first in over three years and is meant to curb inflation, with home, vehicle and corporate borrowing costs set to rise.
- The Reserve Bank of India raised the key benchmark policy rate by 0.25 per cent to 5.5 per cent, marking the first hike in over three years to combat inflation amid the ongoing West Asia crisis.
- With the rate hike, home, vehicle, and corporate loans will become more expensive, while EMIs for existing borrowers will also rise as borrowing costs increase across sectors.
- BASIC Home Loan CEO and Co-Founder Atul Monga said, "Over the full 30-year tenure, this translates into an additional interest outgo of approximately Rs 3.07 lakh for a PSU bank and Rs 3.12 lakh for a private bank."
- Sanjeevini Group Managing Director Suresh warned that the hike may impact housing demand and pressure affordability for first-time buyers, particularly in Tier III markets where financing-dependent buyers face heightened challenges.
- While Monga noted banks could hold current rates to support festive consumption, he added that "Housing remains a long-term financial decision," with demand supported by rising incomes and strong buyer aspirations.
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RBI policy rate hike to immediately pinch retail customers
The RBI has raised the repo rate by 25 basis points to 5.50%, its first hike since February 2023, which could make floating-rate home, car and personal loans more expensive. Borrowers on repo-linked loans may face higher EMIs or longer tenures at their next reset, while fixed-rate loans will remain unaffected.
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