How will the repo-rate hike affect home loans?
May 05, 05:05

On May 4, the Reserve Bank of India (RBI) increased the repo rate by 40 basis points to 4.4 percent for the first time in almost two years. One basis point is one-hundredth of a percentage point. All the loans that come under the repo-linked lending rate (RLLR), especially the home loan and the loan against property, will now cost higher. In floating-rate loans, rate hike will be immediate. The existing borrowers will see their tenor go up. For instance, a home loan borrower with an outstanding principal of Rs 40 lakh and tenor of 20 years at 7 percent interest could see their tenor extend by 15-18 months when interest moves up to 7.4 percent.

What borrowers should do