Home loans for Indiabulls Housing Finance customers will become more expensive from October; here’s why

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Interest rates are influenced by a number of variables including the Reserve Bank of India’s monetary policy

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Your home loan payments could become more expensive. Indiabulls Housing Finance (IBHFL) earlier announced that it has decided to raise benchmark rates for all loans by 10 basis points.

The updated benchmark rates will apply to new customers and go into effect for current borrowers beginning with the October payment cycle.

According to the firm, borrowers and co-borrowers with loans up to Rs 35 lakh will start paying interest at a rate of 8.70%. Previously, IBHFL increased its lending rates by 25 basis points, which came into effect for new customers from August 1 and for existing customers from August 5.

The ultimate interest rate for any IBHFL borrower is determined by their profile, loan size, term, property type and other risk factors. This covers the rates that are provided as part of the co-origination agreement with the banks. The home loan amount is subject to interest charges from the lender, and these interest rates are subject to periodic change.

Why was the interest rate raised?

Interest rates are influenced by a number of variables, including the monetary policy of the Reserve Bank of India (RBI). The RBI decides general interest rates based on inflation, the state of the economy and other factors. The RBI may choose to raise interest rates if the rate of inflation is high in order to depress demand and hence prices.

So far in the current fiscal year, the Reserve Bank of India has hiked the repo rate by a total of 140 basis points. The August valuation was up 50 basis points to o 5.4%. By law, banks must base their monthly lending rates on the marginal cost of funds, as per RBI regulations. The cost of funds for banks increases when the RBI raises its repo rate. As a result, the interest rate on money that banks borrow from the central bank is increased. Lenders then pass the expense on to borrowers by raising interest rates on loans, which increases the cost of EMIs.

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