Loan rates are expected to go up by 0.25% to 0.50% by Jan 1; pushing up your EMI by a maximum of Rs32-33 for every Rs 1 lakh in a 20-year loan.
Planning to apply for a home loan? Here’s reason to worry: Home loan rates are expected to go up by 0.25% to 0.50% on New Year’s Day. This will push up your EMI by a maximum of Rs32-33 for every Rs 1 lakh in a 20-year loan.
With the Reserve Bank of India deciding to hike its Cash Reserve Ratio (CRR) rate from 5% to 5.5% in two slabs of 0.25% each on December 23 and January 6, home loan rates “may rise by 25-50 basis points (0.25% to 0.50%) from January 1”, leading bankers confirmed.
Though no one has gone on record, here’s what officials from leading banks had to say on Saturday: ICICI Bank: “We will have to measure the impact. Maybe a 25 basis points hike is due from January 1. We will meet on Monday to decide.”
HDFC: “We should take a decision in two weeks. The rates are most likely to be hiked.”
State Bank of India: “In all probability, rates will go up.”
A rate hike is certain, but when and how much will be decided by the financial strengths and weaknesses of different banks. “Interest on loans of Rs15 lakh and above may be hiked by 0.25-0.50% even by next week,” said Rana Kapoor, chairman and managing director of Yes Bank.
Meanwhile, the real estate industry has reacted sharply to the RBI move. “It is sad that the RBI is giving secondary treatment to real estate whereas in a country like ours, we need more homes,” rued Sunil Mantri, chairman of Mantri Developers. “It will impact borrowing capacity just when people were moving to buy flats after living in rented places.”
The RBI is likely to meet on January 30 to review its monetary policy. “I expect a 25 basis points hike in the repo and the reverse repo rates in January as well,” said Mohan Shenoi, treasurer, Kotak Mahindra Bank.
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