Wednesday, 12 December 2012

Interest Rate Improve, How to Cope?

Lastly the Reserve Bank of India (RBI) has bitten the bullet and taken the difficult phase of hiking the repo rate in the initial quarter of new financial year behind many soft steps which most likely were not enough to curtail the monster of inflation. With the increase of interest on saving account and development of repo prices by RBI, the banks are now left with no option but to recover the prices on all the loan products owing to this twice whammy.

Intrest Rate Improve

So far the banks have opposed the temptation to improve their interest rates with all development of Repo prices,  but not any longer. Many famous players have previously increased  the prices between 0.50% to 0.75 % depending on the leeway the bank has and the aggressive scenario.

Impact on the borrowers:

Due to the present quantity improve, the worst affected are the home loan borrowers who are servicing the loan under floating interest rate as the lenders have the power to improve the prices on the basis of its base rate for their floating prices.

One more  cause for home loan borrowers to be hard hit by this rate hike is due to the truth that  the quantity usually borrowed as home loan is extensive and the repayment term is also very long. Those of you who have taken home loans under floating rate options, will have to pay higher prices on the amount outstanding as your bank is bound to take the predictable phase of raising the prices.

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