In its new policy news, RBI has announced that there is going to be a further increase in the Home loans and Auto loans by 25 basis points.
“The RBI has sought to maintain an interest rate environment that moderates inflation and checks inflationary expectations,” the Finance Ministry said in a statement, adding that this was on expected lines. “The RBI steps are on expected lines as inflation still remains stubborn and poses a serious threat to growth,” Union Bank of India, Chairman, M.V. Nair told PTI.
Banks will pass this increase on to the customers, who will have to pay high EMIs on their car loan or home loan. This increase in the rates is likely to put pressure on the short term deposit rates and eventually the lending rates.
The main reason for this move by the RBI is because the inflation still remains a serious threat to growth. But, with the markets expecting this hike these rates will not be immediately adopted.
Before you apply for a loan, make sure you have tried to procure funds from all the other available options like raising money from family members and relatives, pledging assets like gold etc. In these times of inflationary pressure, there are further possibilities that the loan rates can be hiked again in future. The best possible way by which you can acquire you dream home is by saving as much as you can and if there is a shortage, then that can be covered by a loan. Opting this pursuit will enable you to carry a lesser debt and for a shorter duration where a change in the interest rates will not affect your EMI payments.