In May 2022, soon after geopolitical concerns took centrestage and the Covid threat started abating, the Reserve Bank of India (RBI) increased repo rates for the first time after 31 months to control inflation. Ever since, RBI has been on a rate hike spree, pausing only recently in April 2023, with an indication that this may not be the end of the rate hike cycle yet.
In the last one year, the central bank has raised interest rates by 2.5 per cent or 250 basis points (bps), and repo rates have reached the 6.50 per cent level after four and a half years. The 2.5 per cent number may not look alarming, but it has left a trail of misery for borrowers who have seen equated monthly instalments (EMIS) go up by a huge 20 per cent for a home loan amount of ₹50 lakh over a period of 20 years, at the cost of compromising with other expenses or remaining indebted for a longer period.
The recent policy action by RBI has kindled some hope. The pause in rate hikes in the first bimonthly policy announcement for financial year 2023-24 has given rise to the cautious expectation that EMIs may not go up further, stopping short of being optimistic about a rate cut.
The development throws up key issues for borrowers, both new and existing. The first, of course, is where are the interest rates headed. The second is relevant for new borrowers who may have been waiting for a rate hike pause and would now be wondering if the time is right for them to take the plunge. The third involves existing investors, who need to put a strategy in place if they haven't done so already, especially now that they may not have to realign their cash flows every two months with every RBI monetary policy announcement. Before dealing with those, we take stock of the pain the rate hikes have caused over the past year.
Diese Geschichte stammt aus der June 2023-Ausgabe von Outlook Money.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der June 2023-Ausgabe von Outlook Money.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
3 Money Rules Women Must Follow
Women typically do not take part in financial discussions and leave it to the family. But that is wrong. It’s as much your right to discuss money whether you are working or a homemaker
PLAN, INVEST IN SELF AND CELEBRATE RETIREMENT
The event focused on the evergreen subject of retirement planning, and speakers talked about various issues, such as how to navigate the market and one's portfolio in the investing phase of retirement planning, the importance of insurance, especially health insurance, and the need for a shift in mindset in sync with the changing financial topography of India
Maximizing Income and Managing Wealth for a Safe Retirement
Gain insights into dynamic withdrawal strategies, balanced expense management, and diversified investment approaches that ensure a secure, enduring retirement lifestyle.
How To Weather The NFO Storm
Fund houses are launching new fund offers (NFOs) one after another with narrower mandates, which may be risky for you. Should you venture in these and under what circumstances?
Coffee Can Investing
The concept of Coffee Can Investing is based on a historical American practice wherein people stored their valuables inside coffee cans. These cans were kept safely for many years until the need for those valuables arose.
Define Your Future
There are incremental changes that you need to make in your financial plan as you age, though the essence remains the same. We have stories of six women from different age groups that show how resilience and grit can secure your future, how awareness can define your path, and fill the financial gaps
'Having My Own Money Gave Me Confidence'
SWARUP MOHANTY, Vice Chairman & CEO, Mirae Asset Investment Managers India shares his experiences when he got his first paycheque and the challenges he faced while building an independent life for himself at the time. He had little money then, so he was unable to save in the initial years, but highlights the importance of starting early
Wealth Creation with Mutual Funds
Create wealth with expert insights on mutual fund strategies for long-term financial growth.
NEW INCOME TAX BILL 2025:10 KEY CHANGES
Union Minister of Finance Nirmala Sitharaman tabled the Income Tax Bill (ITB) 2025 in Lok Sabha on February 13, 2025. The new Bill will replace the Income-tax Act, 1961 (I-T Act, 1961) and will come into effect from April 1, 2026. All the changes in Budget 2025 have been incorporated in this new Bill. Let us take a look at 10 key changes that will affect you directly from financial year 2026-27
How Rate Cut Affects Debt Funds
It is recommended you match your investment horizon with the portfolio maturity. When there is adverse volatility, the accrual over your holding period will take care of it
