Stories
RBI hikes repo rate by 25 bps, home and car loans to get expensive
- •The Reserve Bank of India has hiked the repo rate by 25 basis points or 0.25 percent, increasing it from 5.25 percent to 5.50 percent.
- •The rate hike will raise borrowing costs for banks, leading to higher interest rates on floating-rate home loans, car loans, and personal loans.
- •The decision was taken to control inflation, which remained above the RBI's 4 percent target for the third consecutive month, reaching 4.82 percent in August.
- •For a Rs 50 lakh home loan, the monthly EMI could increase by roughly Rs 777 to Rs 816 depending on the tenure of the loan.
Key Questions Answered
The Reserve Bank of India hiked the repo rate by 25 basis points, or 0.25 percent, raising it from 5.25 percent to 5.50 percent.
The RBI raised the repo rate due to growing concerns over inflation, with retail inflation rising to 4.82 percent in August, staying above the 4 percent target for the third consecutive month. Additionally, rising crude oil prices from West Asian tensions threaten to increase transport and goods costs, creating further inflationary pressure.
For a Rs 50 lakh home loan taken for 20 years at a 7.50 percent interest rate that increases to 7.75 percent, the monthly EMI could rise from about Rs 40,280 to roughly Rs 41,057, increasing payments by about Rs 777. For a 25-year tenure, the monthly EMI could increase by about Rs 816.
