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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

Topics
credit score | home loan rate | Personal Finance

Sanjay Kumar Singh  |  New Delhi 



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 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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First Published: Fri, September 04 2020. 17:12 IST

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