It’s a common knowledge that due to rising inflation, RBI had to step in and hike the repo rate to curb inflation and tighten liquidity in the market. But how does this piece of information affect you?
Read on :
- If you have an ongoing floating rate loan to pay for your house, the tenure of your loan is expected to increase. The impact will be felt more on longer duration loans.
If the rate is hiked from 7% to 7.75% :
| TENURE BEFORE HIKE (years) | NEW LOAN TENURE | ADDITONAL EMIs TO PAY |
| 19 | 21 yrs 6 months | 30 |
| 15 | 16 yrs 6 months | 18 |
| 10 | 10 yrs 6 months | 6 |
| 5 | 5 yrs 2 months | 1.5 |
- If you are planning to take a loan for any purpose, the EMIs will increase of a 20 year loan in following way:
| INTEREST RATE | EMI PER 1 LAKH | HIKE IN EMI OVER 7% |
| 7% | 775.30 | NA |
| 7.25% | 790.40 | 15.10 |
| 7.5% | 805.60 | 30.30 |
| 7.75% | 820.95 | 45.65 |
- If you have investments in fixed deposits, then you have a reason to smile as banks are increasing their deposit rates resulting higher returns for investors.
- If you have invested in Debt Funds and NPS, then the returns are going to further take a hit as when bond yields rise, the value of the bond falls.
