Bangalore: Going to apply for home loan? Then wait and check the current EMI rates. Currently, some of the banks might hike their home loan interest rates due to the sudden hike in rates by almost 25 basis points by The Reserve Bank of India. However, SBI and HDFC the two largest lenders of the country have also immediately increased their interest rates on home loans simultaneuosly. In order to maintain the margins, banks those rely on money markets for funds will be forced to raise their interest rates and costs based on RBI’s (Reserve Bank of India) measure.

It was a relief for borrowers when the central bank's Governor, Raghuram Rajan, indicated that the current hike might be the last if retail inflation eases along expected lines. According to Rajan, his prime focus would now be the consumer price index (CPI)—which measures prices that affect the retail consumer—as opposed to the wholesale price index tracked by the RBI bank earlier.

A panel headed by Deputy Governor Urjit Patel had suggested that the RBI might try its best to target CPI inflation as its main objective. "We have not accepted (CPI) inflation targeting as our prime objective, but we are looking at it," Rajan said and he also added that it would now be a key benchmark.

"The fact that the CPI index is not perfect does not necessarily mean there is no problem. CPI is high and we expect to bring consumer inflation down to 8 percent this year," he said.

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