Why Has The RBI Hiked Repo Rates?
The repo rate is the rate at which the central bank lends money to other banks while the reverse repo rate is the rate at which the RBI borrows money from other commercial banks.
The latest monetary policy review has increased the repo rate to 6.50%. This comes after the RBI raised the rate by 0.25% right after the first 0.25% hike. The rate hikes have come back-to-back after a span of 4 years. The RBI has also adjusted the reverse repo rate which now stands at 6.25%.
The RBI has predicted inflation rates to exceed its 4% target which has led to the policy rates being raised. The decision was taken in the face of expectant inflationary risks, rising oil prices, international trade tensions and the bump in Minimum Support Price of farm produce.
How Does The Rate Hike Affect Home Loan Borrowers?
Banks have already started raising the interest rates on loans which means higher EMIs for borrowers.
Indiabulls Housing Finance and HDFC have already raised their interest rates on home loans by 20 basis points which is now applicable for existing and new customers following the decision by RBI. The table gives an idea of how the customers are affected by this move :
|HDFC Loan Amount||Indiabulls Housing Finance Loan Amount||Revised Interest Rate For Women/Co-Applicants||Revised Interest Rate For Other Applicants|
|Up to Rs. 30 Lakhs||Up to Rs. 35 Lakhs||8.70 %||8.75%|
|More than Rs. 30 Lakhs||More than Rs. 35 Lakhs||8.80%||8.85%|
Existing Borrowers – The existing interest rate will continue till the reset date of your home loan. After that the EMI hike will start getting calculated.
New Borrowers – There is a possibility that interest rates will keep increasing given RBI’s bleak outlook vis-à-vis inflation, which is why you shouldn’t delay if you are planning for a loan. As a new home loan borrower, compare loan rates offered by different lenders as they will vary depending on the loan amount, the bank and your profile.
What This Means For You?
If the RBI has difficulty maintaining its target inflation limit of 4%, another hike rate may follow through by the end of the year, making it the 3rd successive increase.
But does this mean that you postpone your dream of owning a home until the interest rate subsidies? Frankly if you are looking to buy a home, it’s unwise to postpone any longer. Orris Infrastructure Pvt. Ltd. are reputable developers with 1000+ acres of land bank in New Gurgaon is offering premium residences with an attractive subvention payment plan where you pay Zero EMIs till possession by paying only 10% of the cost upfront while the rest is taken care of by the bank. So you save financial stress at the very first step itself along with the freedom from EMIs while waiting for possession. The net interest alone served on a typically availed loan of Rs. 70 lakh is Rs.9,24,000 approximately in 18 months at the increased interest rate of 8.85% (for borrowers other than women) which is pretty substantial for any of us.
In this plan you get not only the advantage of not having to service interest until possession but it also gives you the advantage of locking in a price. As per 99 acres the quarter on quarter growth in price for real estate in Sector 85 is approximately 2.2% which means that the price of the property would jump by nearly 13% if the trend holds for the next 18 months. And to make the deal even sweeter Orris provides an assured rental of Rs.20,000 p.m. until possession.
All this means that you can save yourself a lot of money by going through the subvention route with Orris infrastructure and your dream of having a home in one of the fastest growing localities of Gurgaon is within your reach.You can visit here to