Work actively on improving your credit score to protect your home loan rate

If more lenders hike their risk premium, it will spike the interest rate on your borrowing

Sanjay Kumar Singh | New Delhi
Last Updated at September 5, 2020 00:01 IST

Introduced in May 2017, the scheme had ended on March 31, 2020

Banks expect the stress in their loan books to rise and hence want to provision for the increased risk by charging a higher risk premium

Bank of Baroda (BoB) recently hiked the credit risk premium it charges its home loan customers (the risk premium is added to the external benchmark rate to arrive at the home loan rate). It also made its credit score criteria more stringent. State Bank of India, the country’s largest lender, had hiked its risk premium in May. The gains that accrue to a home loan borrower due to a decline in the repo rate get offset, to some extent, when there is an increase in the risk premium.

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