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Key Points

The Reserve Bank of India's recent 50 basis points repo rate cut promises substantial financial relief for home loan borrowers across India. For a typical Rs 50 lakh home loan, borrowers can expect monthly savings of around Rs 1,569, reducing their EMI from Rs 43,391 to Rs 41,822. This rate reduction extends beyond home loans, potentially making personal and auto loans more affordable as well. The move is expected to boost housing affordability and improve overall sentiment in the real estate sector.

Key Points: RBI Rate Cut Slashes Home Loan EMIs by Rs 1,500 Monthly

  • RBI cuts repo rate from 6% to 5.5%
  • Home loan EMIs expected to drop by Rs 1,569 monthly
  • Borrowing becomes cheaper across multiple loan categories
  • Real estate sector sentiment likely to improve
2 min read

How much will your home loan EMI drop after RBI's 50 basis points repo rate cut?

RBI's 50 basis points repo rate reduction offers significant relief to home loan borrowers with lower monthly EMIs and reduced interest rates.

"Rate cut will help reduce borrowing costs for home buyers - Gaurav Gupta, CREDAI Secretary"

New Delhi, June 6

If you have a home loan, your EMI is set to reduce by over Rs 1,500 a month thanks to the Reserve Bank of India’s latest move.

With the central bank cutting the repo rate by 50 basis points -- from 6 per cent to 5.5 per cent -- banks are expected to lower interest rates on loans.

For a Rs 50 lakh home loan over 20 years, this could mean monthly savings of Rs 1,569 and annual savings of nearly Rs 19,000, offering much-needed relief to borrowers amid high living costs.

The repo rate is the interest rate at which the RBI lends money to commercial banks. A reduction in this rate makes borrowing cheaper for banks, which in turn allows them to offer loans to customers at lower interest rates.

This directly impacts borrowers, especially those with home loans linked to repo-based lending rates (RBLR).

Let’s break this down with a practical example. Suppose you have a home loan of Rs 50 lakh at an interest rate of 8.5 per cent for a tenure of 20 years.

Your monthly EMI in this case would be around Rs 43,391. Now, after the 50 basis points cut in the repo rate, if the bank reduces your interest rate to 8 per cent, your new EMI would come down to approximately Rs 41,822.

Gaurav Gupta, Secretary of CREDAI (Confederation of Real Estate Developers’ Associations of India), welcomed the RBI’s monetary decision, saying that the rate cut will help reduce borrowing costs for home buyers. Beyond just lowering monthly payments, it will improve housing affordability across the country.

He further added that a drop in interest rates not only benefits individual buyers but also boosts overall sentiment in the real estate sector, which positively impacts multiple industries connected to it.

Importantly, it's not just home loans that will get cheaper -- personal loans, auto loans, and other types of retail borrowing will also see reduced EMIs as a result of lower interest rates.

- IANS

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Reader Comments

R
Rahul K.
Finally some good news for middle-class families! ₹1,500 monthly saving may seem small but it'll help cover groceries or school fees. Hope banks pass on the full benefit quickly. RBI has done the right thing considering inflation pressures. 🙏
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Priya M.
As someone who took a home loan last year, this is a welcome relief. But I wish RBI had acted sooner - property prices in Bangalore have already gone through the roof! Banks should automatically adjust EMIs without making customers run around for paperwork.
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Amit S.
Good move but banks will find ways to recover this through other charges. Last time rates were cut, my bank took 3 months to reflect it in EMI while immediately reducing FD rates! RBI should monitor implementation strictly. #ConsumerAwareness
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Neha T.
This could be the push many young couples need to buy their first home! 🏡 The savings add up to nearly ₹4 lakh over loan tenure - enough for children's education. However, developers shouldn't use this as excuse to hike property prices again.
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Sanjay P.
While EMI reduction helps, what about those struggling with job losses? RBI should also focus on restructuring options for distressed borrowers. A 50 bps cut is good but may not be enough for sectors hit hardest by pandemic.
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Kavita R.
As a retired banker, I appreciate RBI's balanced approach. This rate cut will stimulate housing demand without risking inflation. Young buyers should use this opportunity but remember - interest rates are cyclical. Plan for future hikes too!

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