Monday, April 2, 2007

Interest Rates Go Up

As I mentioned in my previous post, I was expecting RBI to hike interest rates and the prediction has come true.

As a result banks have started hiking lending rates across the board. Since I have been in LA for quite some time, I do not even know what my home loan rate is. I am sure once I get back it's gonna be an ugly picture. I made a big mistake by not locking in low fixed interest rates when I took home in Jan 2006. Since then the rates have gone up by 3 to 4%. I hope we see deposit rates also go up but until now that has not happened.

Rate hike has led to a carnage on the stock markets with Sensex down by over 4.5%. This was to be expected as higher interest rates means less money will be chasing the stocks and the value will therefore decrease.

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