Homebuyers Alert! You may have to pay higher interest on home loan EMI

New Delhi: In what could be a setback for home buyers looking to buy a home with the help of bank loans, they may soon have to pay higher interest on home loan EMIs. The reason behind the increase in the interest rate on home loans is that according to a report by the State Bank of India (SBI), the Reserve Bank of India (RBI) may increase the repo rate by at least 25 basis points in June. ,

SBI Ecowrap report on Wednesday (April 13) said it expects a rate hike of 25 basis points (bps) in June and August, with a cumulative increase of 75 basis points in the (interest rate hardening) cycle.

For the unversed, the repo rate is the interest rate at which the RBI lends money to commercial banks. The hike in repo rate will put pressure on lenders to hike interest rates on home loans, car loans, personal loans and other types of advances. So, if you have taken a home loan at a floating interest rate, you may have to pay a higher rate of interest for your home loan.

RBI left the repo rate unchanged at 4 per cent in its monetary policy announced last week. The monetary panel had also decided to remain accommodative with a focus on the return of housing to ensure that inflation remains within the target while supporting growth going forward.

However, with rising inflation, it is finding it difficult for the RBI to keep the repo rate unchanged. For example, retail inflation rose to 6.95 per cent in March 2022 on an annualized basis from 6.07 per cent in February 2022 due to a sharp rise in food prices. Retail inflation is measured by the Consumer Price-Based Index (CPI).

The Russia-Ukraine conflict has led to an unprecedented increase in the level of inflation. There has been a sharp rise in the prices of food items like wheat, protein items (especially chicken), milk, refined oil, potato, chilli, kerosene, firewood, gold and LPG. Read also: Teacher turned Zomato agent got new bike while delivering food on bicycle, thanks to 18 year old boy

The report said that pressure on the supply of sunflower oil from Ukraine has led to a change in export policy from Indonesia, which has reduced imports of palm oil. Read also: First sale of Realme GT 2 Pro today: Know the price, specifications and attractive launch offers of the flagship phone

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