Recent News on Affordable Home Loans

Canara Bank Revises Home, Other Loan Interest Rates: Check How Much EMIs Will Go Up

Overnight MCLR increased 35 basis points to 7.90%, while Canara Bank increased one-month MCLR by 45 basis points to 8%.

New Delhi: Canara Bank (MCLR) has revised its repo lending rate (RLLR) and marginal cost money-based lending rate. According to a bank filing with the BSE, the increase will come into effect on March 12, 2023.

Canara Bank raised its overnight MCLR by 35 basis points to 7.90% and one-month MCLR by 45 basis points to 8%.

The six-month MCLR increased to 8.40% from 8.30%, while the three-month MCLR increased by 25 basis points to 8.15%. The bank raised its one-year MCLR rate to 8.60% from 8.50%.

The RBI raised the repo rate on February 8

The RBI in the year In its monetary policy meeting on February 8, 2022, agreed to increase the repo rate by another 0.25%, prolonging the pain of rising interest rates for borrowers. The central bank has raised interest rates six times in a row since May last year. Thus, between May 2022 and February 2023, the return rate increased by a total of 2.5 percent, from 4 percent to 6.5 percent.

Although the RBI has raised rates again, in the last three monetary policy boards, the interest rate hike has been reduced from 50 basis points to 35 basis points and now to 25 basis points.

RBI Monetary Policy Details

The Reserve Bank of India (RBI) is the central bank of India that regulates and operates the monetary system. The RBI&rsquo's monetary policy is designed to control prices and stimulate economic growth.

The Monetary Policy Committee of the Reserve Bank of India regulates monetary policy in India. The Monetary Policy Committee meets every two months to review the economic and financial situation in the country and determine the appropriate financial position. The Monetary Policy Committee uses various tools to influence the economy’s money supply and interest rates.

Following are some of the major instruments used by the Reserve Bank of India to bring in operations of its monetary policy.

Repo rate:

The rate at which the Reserve Bank of India lends money to commercial banks. The increase in repurchase agreements has made it more difficult for banks to borrow from the Reserve Bank of India, which has reduced the money supply and raised interest rates.

Reverse Repo Rate:

The rate at which the Reserve Bank of India borrows from commercial banks. When reverse repo rates rise, it becomes more attractive for banks to lend to the RBI, which reduces supply and interest rates.

Cash Reserve Ratio (CRR):

It is the ratio that commercial banks are required to maintain as a percentage of their deposits with the Reserve Bank of India. When CRR increases, banks have less money to provide loans, which reduces the money supply and increases interest rates.

Statutory Liquidity Ratio (SLR):

The percentage of deposits that a bank holds in liquid assets such as government securities. When the SLR increases, banks lend less, reducing the money supply and raising interest rates.

The RBI uses instruments such as open market transactions, foreign exchange transactions, and currency stimulus to increase the money supply and consumer base in the economy.

In final, the RBI monetary policy aims to stabilize prices, boost economic growth, and ensure the country's economic stability.

No Change in Repo Rate last RBI Monitory Policy

The RBI's monetary policy decision to keep the repo rate unchanged indicates that the central bank is maintaining the status quo and is keeping commercial bank lending rates unchanged. This decision can be influenced by many factors, including the state of the economy, inflation, and the financial condition of the banking system.

A decision to 'not change' the repo rate may indicate that the RBI is satisfied with the current economic and financial situation of the country and does not recognize the need for urgent political action. Failure to do so may indicate that the RBI is taking a wait-and-see approach, closely monitoring developments before taking further action.

Overall, the market's "no change" determination of the repo rate is a good sign as it provides stability and confidence in the lending rate. It may also indicate that the Reserve Bank of India (RBI) is pursuing a different monetary policy rather than addressing short-term growth.

Seasonal News Update

Mortgage terms that extend beyond retirement age? Here's how to get it off
With the 250-basis-point hike rising from a decade-low of 6.5 percent to more than 9 percent, many borrowers’ repayments have extended beyond their retirement years. Here&rsquo's how they can deal with the situation.

Interest rates will continue to rise from May 2022, and individuals who have obtained housing loans in the past two years will be in a difficult situation.

With interest rates rising from 6.5 percent to more than 9 percent in a decade, many borrowers have extended repayments beyond retirement age after a 250 basis point hike.

The EMI burden increases significantly for these individuals as banks do not allow providing payment terms beyond retirement age.
Even individuals who extend their tenure without any change in EMI should end up paying extra years.

Overall, the sharp rise in interest rates has significantly disrupted the financial position of new Affordable home loan borrowers due to high initial interest payments.

However, there are a number of ways borrowers can prevent owning after retirement age while reducing the interest burden. Refinancing your loan is one of the best ways to reduce the burden of high-interest rates and prevent your holding period from being overdrawn.

• Loan refinancing:-

What is debt refinancing?
This is the best way to reduce your interest rate burden and prevent extended payment terms is to refinance your loan.

Debt refinancing is the process of replacing existing Affordable Home loan with new ones with better terms, such as lower interest rates and shorter terms. Commissions are usually 0.5%, but they are very useful to find.

Many lenders want to offer more favorable terms to new customers seeking refinancing. They offer lower interest rates, allowing for lower payments and shorter tenures. Many lenders want to offer more favorable terms to new customers seeking refinancing. They offer lower interest rates, allowing for lower payments and shorter tenure.

Recently, borrowers getting profit from refinancing their loans:-
However, it makes more sense to restructure for closely related borrowers. Even if you make a profit of 0.25% to 0.5%, it’s worth it. This is because the interest rate on the loan in the early years was very high, and any move to increase the interest rate would increase the burden further.

So, for those who are years or even decades behind on their loan repayments, the interest payments are higher than the principal. While all new mortgages are linked to 2019 repo rates, lenders set their own base rate spreads based on a range of factors, including costs and options.
Many banks are often willing to narrow down to interest more in order to attract new customers or offer rebates.

Overall, rising mortgage rates have technically pushed many people into retirement, triggering a financial crisis. However, refinancing the loan at a lower rate is an option that can help reduce inflation.