RBI may continue to increase the repo rate even further, Check Reasons

An increase in the repo rates increases the cost of borrowing of banks. Banks pass it on to the customers. This makes all types of loans, including home loans, expensive. The new retail loans that banks offer 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 affects the interest rate of the home loan. Also, it has an impact on old home loans linked to MCLR, Base Rate and BPLR.RBI latest news: RBI’s eye on offline payment too, know what is the matter
How much has the installment increased in five months
The repo rate has been increased four times since May. If you have taken a home loan then you have two options. You can extend the tenure of your loan or increase the installment. The repo rate has increased by 1.90 per cent in five months. Let us assume that the home loan rate of the bank from which you have taken the home was 6.70 per cent earlier and you have taken this loan for a period of 20 years. Now the interest rate has increased to 8.60 percent. In such a situation, earlier you had to pay an EMI of Rs 22,222 on a loan of Rs 30 lakh, but now you will have to pay Rs 26,225. Similarly, if your loan is of Rs 50 lakh or Rs 1 crore, then see in the chart how much money you will have to repay now as compared to earlier.

How much can the installment increase further
It is believed that the increase in the repo rate will continue even further. This is because retail inflation stood at 7 per cent in August. The inflation target for RBI is two to six per cent. But this year it has remained consistently above the RBI target. This is the reason why the repo rate may continue to increase in the future as well. Suppose the central bank increases the repo rate by 40 basis points, then the repo rate will reach 6.30 percent. Let us see where the increase of 40 basis points will lead to your EMI.