Moola Mania India » base rate http://www.moolamania.com/india Personal Finance Blog in India Mon, 21 Mar 2011 14:59:38 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Effect of base rate on home loans http://www.moolamania.com/india/2010/07/effect-of-base-rate-on-home-loans/ http://www.moolamania.com/india/2010/07/effect-of-base-rate-on-home-loans/#comments Sat, 03 Jul 2010 13:52:48 +0000 Laxmi Kasbekar http://www.moolamania.com/india/?p=213 With effect from 1st July 2010, base rate system has set in. Base rate has replaced old system of benchmark prime lending rate (BPLR). The problem with BPLR was that banks lent money to large corporates at rates lower than BPLR. This meant large corporates got money cheaply, while others had to pay interest at rates over BPLR. RBI has introduced base rate with the aim of introducing transparency in the lending system.

So how will you as a home loan borrower be affected? It is likely the home loans will go up. This is because banks won’t be permitted to lend below base rate. Now home loans are very competitive and banks have been lowering their interest rates to attract more customers. Now all that is slated to stop. So you will end up having to pay more.

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