It is the right time to buy a house or a car and a wrong time to make a deposit. Banks across the board are planning to increase the policy rates by 25 to 50 basis points. It is expected that the government will first increase the deposit rates and then the basis rates making car loans, home loans, etc. more expensive. Although bankers refused to pen down a timeline for the increase, nevertheless, they do not deny an upward rise in near future. "There is an upward bias, but we cannot say when the rates will rise, as it is a function of demand and supply. But it is not too far off,” said HDFC Bank CEO and MD Aditya Puri.
An increase in basis points would eventually lead to car loans getting more expensive which would make owning a car more expensive. Car makers in India have already increased prices of their models four times already in this year. Most of them have sought increase in the commodity prices as their reason to increase prices.
All banks have already fixed their benchmark base rate and can now be revised only from October 1. Existing borrowers will not be hit immediately by any change in the interest rates. However, for new borrowers, banks can charge higher interest rates by raising the differential they charge over and above the base rate.
