What can borrowers do to combat rising interest rates on loans?
On September 30, the Monetary Policy Committee (MPC) raised the repo rate by 50 basis points (bps), bringing it to 5.90%. During this fiscal year, the MPC raised the policy rate by 190 basis points to combat inflation, which hit a five-month high of 7.41% in September. However, retail inflation remained above the RBI’s upper tolerance limit of 6%, and following banks’ interest rate hikes on a variety of lending products due to the rise in the repo rate, borrowers will now be required to make higher monthly installments. payments (EMI) for loans contracted in an environment of rising interest rates throughout the national financial system. When policy rates rise, interest rates on loan products are also raised by financial institutions to meet their cost of borrowing. The next monetary policy meeting will be in December, and the RBI is expected to raise the repo rate again to curb rising inflation. So, in the face of rising interest rates, what can borrowers do to combat them?