IMPACT OF R.B.I INTEREST RATE HIKE





IMPACT OF R.B.I INTEREST RATE HIKE


The Reserve Bank of India (RBI) hiked the repo rate by 50 basis points in the June meeting. The Repo rate is the key rate at which the RBI lends short-term funds to commercial banks. The total repo rate hiked by R.B.I in this F.Y is 90 basis points till now.

Persistent inflation pressures are becoming more acute, particularly on food, Das said, adding that there is a risk if prices stay at this level for "too long" and expectations become unanchored.

"Inflation must be tamed to keep the Indian economy resolute on its course to sustained and inclusive growth," he said.

Increases in fuel and food prices, exacerbated by the war in Ukraine and sustained pandemic-related supply chain disruptions, have been above the RBI comfort zone of 2-6 percent for three months in a row. Headline inflation in March rose to a 17-month high of 6.95 percent and it may be above the target band in April too.

 This may be worrisome for existing, and potential borrowers of home and car loans as their interest rate and subsequent EMIs will increase. As per the RBI rules, banks are required to link the interest rates of loans with an external benchmark, which is usually the RBI’s repo rate.

 Here are the details of how much EMI borrowers will need to pay following the repo rate and the subsequent interest hike on home loans. For detailed calculations please visit my website link below.

For a home loan of Rs 30 lakh:

Home loan amount:   Interest rate:   Tenure: 

          30 lakh            7 percent           20      

Existing EMI:   New Rate:     New EMI:

      23,259        7.9 percent        24907

TOTAL INTEREST PAYABLE @7 %:                      2582160

TOTAL INTEREST PAYABLE @7.9%:                     2977680

DIFFERENCE DUE TO INC. IN INTEREST RATE:   395520

For a home loan of Rs 50 lakh:

Home loan amount:  Interest rate:  Tenure: 

         50 lakh            6.6 percent      20    

Existing EMI:    New Rate:     New EMI:

    37,574           7.5 percent      40280

TOTAL INTEREST PAYABLE @ 6.6 %:                      4017760

TOTAL INTEREST PAYABLE @ 7.5 %:                      4667200

DIFFERENCE DUE TO INC. IN INTEREST RATE :     649440

For a Car loan of Rs 10 lakh:

Car loan amount:  Interest rate:  Tenure: 

          10 lakh            8 percent    7     

Existing EMI:   New Rate:     New EMI:

      15586         8.9percent     16038

TOTAL INTEREST PAYABLE @8 %:                          309224

TOTAL INTEREST PAYABLE @8.9 %:                       347192

DIFFERENCE DUE TO INC. IN INTEREST RATE:     37968

For a car loan of Rs 20 lakh

Car loan amount:   Interest Rate:   Tenure: 

      20 lakh            7.5 percent            7    

Existing EMI:    New Rate:     New EMI:

   30,677           8.4 percent     31,572

TOTAL INTEREST PAYABLE @7.5 %:                      576868

TOTAL INTEREST PAYABLE @8.4 %:                      652048

DIFFERENCE DUE TO INC. IN INTEREST RATE:     75180

 

 

 


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