How much will your home loan EMI drop after RBI's 50 basis points repo rate cut?
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Synopsis
Discover how the recent repo rate cut by the Reserve Bank of India can significantly lower your home loan EMI by over Rs 1,500 monthly, providing essential financial relief amidst rising costs. This change could not only aid individual borrowers but also enhance housing affordability across the nation.
Key Takeaways
- EMI reductions exceeding Rs 1,500 monthly.
- Annual savings of nearly Rs 19,000 for borrowers.
- Impact on various loan types beyond home loans.
- Potential increase in housing affordability.
- Positive sentiment in the real estate sector.
New Delhi, June 6 (NationPress) If you hold a home loan, your EMI is poised to decrease by more than Rs 1,500 per month, courtesy of the Reserve Bank of India’s recent decision.
The central bank has slashed the repo rate by 50 basis points, bringing it down from 6 percent to 5.5 percent, which is expected to prompt banks to lower interest rates on loans.
For a home loan of Rs 50 lakh over a span of 20 years, this could translate to a monthly saving of Rs 1,569 and annual savings nearing Rs 19,000, providing essential relief for borrowers amidst rising living costs.
The repo rate refers to the interest rate at which the RBI lends funds to commercial banks. A reduction in this rate makes borrowing less expensive for banks, enabling them to offer loans to customers at more favorable interest rates.
This change has a direct effect on borrowers, particularly those with home loans linked to repo-based lending rates (RBLR).
Let’s illustrate this with a practical example. Imagine you have a home loan of Rs 50 lakh at an interest rate of 8.5 percent for a duration of 20 years.
Your monthly EMI in this scenario would be around Rs 43,391. Now, following the 50 basis points reduction in the repo rate, if your bank lowers your interest rate to 8 percent, your revised EMI would drop to roughly Rs 41,822.
Gaurav Gupta, Secretary of CREDAI (Confederation of Real Estate Developers’ Associations of India), praised the RBI’s monetary decision, stating that the rate cut will assist in lowering borrowing costs for home buyers. Beyond merely reducing monthly payments, it will enhance housing affordability nationwide.
He also noted that a decrease in interest rates not only aids individual buyers but also uplifts overall sentiment in the real estate sector, positively influencing numerous connected industries.
Significantly, it’s not just home loans that will become cheaper; personal loans, auto loans, and other forms of retail borrowing will also experience reduced EMIs as a result of lower interest rates.
Point of View
The recent decision by the Reserve Bank of India to cut the repo rate is a strategic move aimed at alleviating financial pressure on borrowers. This reduction not only benefits home loan holders but also stimulates the broader economy by enhancing borrowing affordability. It is crucial to view this development as a significant step towards bolstering economic sentiment in the real estate sector.
NationPress
07/06/2025
Frequently Asked Questions
What is the impact of a repo rate cut on home loans?
A repo rate cut results in lower interest rates, which leads to reduced EMIs for home loans, providing financial relief for borrowers.
How much can I save with the recent repo rate cut?
Home loan borrowers could save over Rs 1,500 per month, translating to nearly Rs 19,000 annually.
Will other loans also see a reduction in EMIs?
Yes, personal loans, auto loans, and other retail borrowing will also benefit from lower interest rates due to the repo rate cut.
