The Reserve Bank of India (RBI) hiked the repo rate by 25 basis points to 6.5% on Wednesday. The reasons cited for such an increase, include rising trade tensions, accelerating crude oil prices, slowing economic activity and rising retail inflation.

Repo rate is the rate at which the RBI lends short-term money to the banks.

Our Take

A hike in repo rate will have a direct impact on borrowers as banks are likely to increase interest rates on loans by increasing the marginal cost based lending rate (MCLR). According to the central bank's mandate, all loans including home loans disbursed on or after April 1, 2016, should be linked to MCLR.

People planning to opt for a home should do it now before it gets costlier.