Higher interest rates on loans are anticipated as a result of the major banks, including State Bank of India (SBI), Bank of Baroda (BOB), HDFC Bank, and Yes Bank, recently raising their marginal cost of funds-based lending rates (MCLR).
The growing cost of funds for banks is the primary cause of the MCLR increase. Banks incur increased overall costs as deposit rates rise to draw in more savings. Banks raise lending rates on borrowers to cover these higher costs and maintain their profit margins.
How will these higher borrowing rates impact borrowers?
Increasing lending rates can significantly impact your finances. Higher interest rates affect both personal and business finances in several ways. Let’s examine some of the potential consequences:
What should borrowers do?
While rising interest rates can pose challenges, taking proactive measures can help mitigate their effects. These include:
Your finances may be strained by rising lending rates. On the other hand, you can lessen their effects and successfully manage your finances during times of rising interest rates by being proactive. Furthermore, ensure that you have enough insurance coverage because unanticipated costs can be more difficult to handle when finances are tight, especially in the event of an unexpected event like a sudden death
