- Date : 19/07/2022
- Read: 3 mins
Home loans become expensive as RBI hikes repo rates!
This financial year was characterized by high inflation. The central banks globally have hiked their policy rates, and the liquidity conditions have tightened significantly. The RBI has also hiked the repo rates in India. The first hike was an unscheduled policy meeting in May this year. The second hike was in a scheduled policy meeting in June this year.
This hike in the repo rates has increased the home loan rates. The existing repo rate linked home loans have become more expensive by 0.9% annual interest. Earlier, the repo rate was 4%, and now the RBI repo rate is 4.9%. If experts are to be believed, they expect a further hike in the repo rate this year. The pre-pandemic repo rate was 5.25%, and it is expected that in the policy meeting in June, the RBI will take the repo rate back to the pre-pandemic level.
Home loans across the board have become expensive with this move by the RBI. Some people may opine that the pandemic repo rate was not in line with long-term expectations and that the pandemic-induced repo rates were a temporary phenomenon. But many people have taken repo rate linked home loans in the last two years, expecting that the repo rate will not increase.
How expensive are home loans now?
The home loan rates have increased now. The current home loan rates for existing clients linked to the repo rate have increased by 0.9% starting July 2022. For the MCLR linked rate, the hike will be as per the MCLR rate reset date for individual clients and the change in the MCLR rate of the bank.
The new home loan customers will have to take loans at the increased prices, and the loan against property rates has also increased. The home loan rates for the banks now are:-
- ICICI Bank- The home loan rates for salaried borrowers start at 7.6%, and for self-employed borrowers start at 7.7%.
- SBI- The home loans at SBI start at 7.55%. The loan against property rates starts at 9.3%.
- HDFC Bank- The HDFC Bank home loans start at 7.55%. The home loan rate might also go to 8.55%, depending on your CIBIL score.
- Bank of Baroda- The home loan rates for this bank start at just 7.45%. It is one of the cheapest home loans in the market as of now.
- Bajaj Housing Finance- The home loans for this NBFC start at just 7.2%. But this firm charges higher processing fees.
The home loan rates have increased because of the increase in repo rates by the RBI. If you had a repo rate linked home loan, your existing home loan rates have increased by 0.9% in this financial year. You can now apply for new home loans starting at 7.2% from various banks and NBFCs. Ensure you understand the loan terms and conditions, and also enquire about all the charges from the home loan financial institution. Try these Home loan EMI strategies to pay off your loan in just 13 years instead of 20 years.