New Delhi. RBI has once again increased the interest rates. This is the fourth time in a row that interest rates have been hiked. The central bank has increased the repo rate by 50 basis points. Repo rate is the rate at which RBI gives loans to banks. With the increase in repo rates, the cost of borrowing of banks will also increase. As a result all types of loans including home loans will become very expensive. It is worth noting that the new retail loans given by the bank are linked to an external benchmark. In most cases, it is linked to the repo rate. This is the reason that any change in the repo rate also affects the interest rate of the home loan. At the same time, due to increase in the repo rate, the home loan installments also increase. Apart from this, it will also have an impact on old home loans linked to MCLR, Base Rate and BPLR. Let us tell you, the repo rate has been increased by 190 basis points from the month of May. With an increase in the repo rate, your home loan EMI will also become costlier. For example, suppose a person has taken a home from a bank for a period of 20 years. Earlier its home loan rate was 8.10 percent. In such a situation, earlier he had to pay an EMI of Rs 25,280 on a loan of Rs 30 lakh, but now after increasing the repo rate, he will have to pay Rs 26,225.
Due to the increase of 50 basis points i.e. 0.50 percent in the repo rate by the RBI, banks will get loans at a higher rate from the Reserve Bank. In such a situation, banks transfer this increase to the customers, making their loan rates expensive. The increase in this repo rate not only makes new loans expensive, but also increases the EMI of an already running home loan or auto loan. While this will not affect the personal loan EMI, the new personal loan prices will go up.