Loan interest

Canara Bank interest rates: Canara Bank raises interest rates on home loans

Canara Bank raised its repo-linked lending rate to 8.30% from 7.80% earlier, an increase of 50 basis points. The new lending rate will come into effect on August 7, 2022. The revision came a day after the Reserve Bank of India (RBI) raised policy rates by 50 basis points (100 basis points = 1%).

The effective interest rate on home loans for women applying for a home loan will be 8.05% and for other borrowers the effective interest rate will be 8.10%, according to the Canara Bank website. For high-risk borrowers, a credit risk premium of between 0.05% and 2% is added to the lending rate linked to the repo rate to obtain an effective interest rate on home loans.

Canara Bank, on its website, said a 25 basis point concession is offered to low-risk borrowers until September 30, 2022. According to the bank’s website, “the concession will only be applicable to low risk borrowers where new home loans (all variants) sanctioned and disbursed during the period i.e. 01.07.2022 to 30.09.2022 For female borrowers, discount is available for 5 basis points.

The effective interest rate on home loans for high-risk borrowers will be between 8:35 a.m. and 10:30 a.m., starting tomorrow.

Why did the RBI raise its key rates?

The RBI has increased the repo rate three times since the start of the 2022-23 financial year. This includes a one-time announcement expected in May 2022. The central bank raised the repo rate by 40 basis points in May. Again, in its June and August monetary policy reviews, the RBI raised the repo rate by 50 basis points each time. The central bank went on a rate hike spree due to rising inflation. Retail price inflation has remained stubbornly high at over 6% for more than the past six months.