RBI Rate Cut: Big Savings On Home Loans

The Reserve Bank of India has cut the repo rate by 25 basis points, bringing it down to 6%, aiming to provide relief to home loan borrowers. This move, led by RBI Governor Sanjay Malhotra, is expected to push home loan interest rates below 8% per annum, benefiting both new and existing borrowers with floating rates.

However, banks’ responses to repo cuts have varied in the past. While HDFC and Axis Bank have already passed on the full benefit to customers, others may act more cautiously. A 50 basis point cut by lenders could reduce EMIs significantly. For instance, a Rs 50 lakh loan over 20 years could see monthly EMIs drop by Rs 1,595 — saving over Rs 3.8 lakh over the loan’s term.

Borrowers with repo-linked loans, especially those with high credit scores, stand to gain the most. Experts suggest refinancing for those currently paying significantly above the new rates.