have increased their repo rate Linked lending rate up from 7.80% earlier to 8.30%, an increase of 50 basis points. The new lending rate will be applicable from August 7, 2022. The revision comes a day after the Reserve Bank of India (RBI) hiked key policy rates by 50 basis points (100 basis points = 1%).

According to the Canara Bank website, the effective interest rate on the home loan for women applying for a home loan will be 8.05% and for other borrowers the effective interest rate will be 8.10%. For high-risk borrowers, a credit risk premium in the range of 0.05% and 2% is added to the lending rate linked to the repo rate to arrive at the effective interest rate on the home loan.

Canara Bank on its website has said that a concession of 25 basis points is being offered to low-risk borrowers till September 30, 2022. According to the bank’s website, “The concession will be applicable only to low-risk borrowers where fresh housing loans (all types) have been sanctioned and disbursed during the period from 01.07.2022 to 30.09.2022. For women borrowers, by 5 basis points.” Concession is available for

The effective interest rate on home loans for high-risk borrowers will be in the range of 8.35 to 10.30 from tomorrow.

Why RBI hiked key policy rates?

RBI has hiked the repo rate thrice since the beginning of the financial year 2022-23. This includes a one-time scheduled announcement made in May 2022. The central bank hiked the repo rate by 40 basis points in May. Then in the monetary policy review of June and August, the RBI hiked the repo rate by 50 basis points each time. The central bank is increasing interest rates due to rising inflation. Retail inflation has remained at an all-time high of over 6 per cent for the past six months.