Real estate loans Customers ATTENTION! Here’s your strategy to beat rising interest rates
New Delhi: Due to rising inflation in India, the Reserve Bank of India (RBI) announced a repo rate up 40 basis points to 4.4% Wednesday. The announcement was made by RBI Governor Shaktikanta Das by 2 p.m. and 3 p.m., stock markets had fallen more than 1,000 points. Along with the pension rate, the The cash reserve ratio (CRR) was also raised by 50 basis points to 4.5%..Read also – Explained | 5 Ways Repo Rate, CRR Hike by RBI Will Impact You
But that’s not all. According to reports, the RBI is expected to further increase the repo rate in the coming months. A report from Indian Express says there may be chances of the RBI raising rates by 150 to 200 basis points this year alone. This would put enormous pressure on the pockets of households who have taken out home loans. NDEs are expected to increase significantly. Also Read – RBI Redemption Rate Increase Will Impact Home, Auto and Personal Loan EMIs. Check here how
The immediate impact of the RBI Governor’s hike in repo rates will be an increase in interest rates charged by banks. If home loan rates rise from 7% to 9% (a rise of 200 basis points), the EMI on a loan of Rs 50 lakh for 15 years will increase by Rs 5,772 per month. With the drop in income due to Covid-19, this will significantly reduce household savings. Also Read – RBI Raises Interest Rate by 40bps to 4.40%, All EMI Loans Become Costly
5 things you can do to save your hard-earned cash
- Currently, as fixed deposit (FD) rates are low and range between 3.1% and 4.1%, home loan customers can prepay a portion of their loans from their FD.
- Additionally, as rates are expected to remain low for the foreseeable future, clients can also increase their EMIs for the next 12-18 months to lessen the impact of rate hikes.
- As the yield on FDs is relatively low compared to current inflation levels, people may opt for shorter-term investment options (PPF, etc.) rather than long-term.
- The stock market offers good returns to investors. With proper advice and research, the markets can become an attractive place to invest. The return must be above 7% to overcome inflation. According to experts, a decline in the stock market should be seen as an opportunity to buy more stocks.
- Investors should also diversify their portfolios by including more equity instruments and mutual funds, as this would lead to better tax management.