? Cool Title, but what’s the news?
The Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) raised policy rates by 25 basis point, the first back-to-back hike since October 2013.
? Okay, but what does it mean?
Now, the repo-rate stands at 6.5 percent from 6.25 percent earlier. This increase in repo rates will increase the bank’s cost of funds, which might force them to hike their MCLR.
? Why should I care?
In a rising rate scenario, it makes immense sense for customers repaying loans to make periodic principal pre-payments. Home loans will become costlier for fresh borrowers as and when the banks raise their respective MCLRs.