How To Counter Rising Home Loan Rates

We are coming out of a two-year period of benign interest rates. During the pandemic, rates had been kept low to accommodate economic growth. During this period, we also saw home loans being benchmarked to the repo rate. With the pandemic, the Reserve Bank of India started slashing the repo rate. We saw home loan rates fall to as low as 6.40 per cent from nearly 9 per cent just three years back. Today, over two dozen lenders have their lowest home loan rate pegged at under 6.95 per cent for eligible borrowers. Economic indicators, however, are signaling the bottoming out of interest rates. The inflation rate has hardened to nearly 7 per cent. The 10-year Government of India bond yield hit a three-year high of 7.2 per cent in April. Several banks have increased their rates of deposit and marginal cost of funds-based lending rates (MCLR). Experts predict that rates could gradually rise by...