Mumbai: While affecting individual buyers, the increased rates are affecting the auto and real estate sectors too where the demand is directly proportional to the cost of funds for individuals. A 50 basis point increase will consequently change the equated monthly installment on a 20 year home loan of Rs. 20 lakh by Rs. 342.
Now when the inflation is rising close to double digit, there are chances that it can further rise in future. Whereas some bond dealers are of the view that the decision by the US Fed to keep the rates near zero and considering the sustained slowdown in the west, Reserve Bank of India (RBI) may alternatively choose to pause. This view of the government is clearly reflected in the prices of the government bonds.
Banks these fays which are lending at 8% in the interbank market are investing in a 10 year bond with a yield of 8.2%. A uniform yield clearly indicates that the banks are expecting a slowdown. As the banks are uncertain with regard to the demand for loans as a result they are not increasing long term deposit rates which means the interest for the short as well as long term are at par.
Now when the inflation is rising close to double digit, there are chances that it can further rise in future. Whereas some bond dealers are of the view that the decision by the US Fed to keep the rates near zero and considering the sustained slowdown in the west, Reserve Bank of India (RBI) may alternatively choose to pause. This view of the government is clearly reflected in the prices of the government bonds.
Banks these fays which are lending at 8% in the interbank market are investing in a 10 year bond with a yield of 8.2%. A uniform yield clearly indicates that the banks are expecting a slowdown. As the banks are uncertain with regard to the demand for loans as a result they are not increasing long term deposit rates which means the interest for the short as well as long term are at par.
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