Home Loan EMI Relief on the Way: Several Banks Slash Interest Rates After RBI's Repo Rate Cut — Full Report

Good news for home loan borrowers! If you're planning to apply for a home loan or are already repaying one, your monthly EMI could soon become lighter. Following the latest decision by the Reserve Bank of India (RBI) to reduce the repo rate by 0.25 basis points, several public sector banks have swiftly responded by lowering their lending rates.

The decision to cut the repo rate was taken during the recent meeting of the Monetary Policy Committee (MPC). As expected, banks have wasted no time passing on the benefit to their customers. Within just a few hours of the RBI’s announcement, at least four major public sector banks declared a 0.25% reduction in their loan interest rates.

Which Banks Have Reduced Their Loan Rates?

Though individual banks will announce their specific rate adjustments, several state-run banks have already confirmed the implementation of lower rates for both home loans and personal loans. This move is aimed at boosting credit growth and reducing the financial burden on borrowers at a time when economic conditions remain uncertain.

How Will This Impact Your Home Loan EMI?

The reduction in interest rates directly affects your monthly EMI. If you have a floating-rate loan linked to the repo rate, your EMI is set to drop proportionally. For instance, if you have a home loan of ₹50 lakh over 20 years, a 0.25% cut in the interest rate could save you thousands of rupees annually.

This change is particularly significant for new borrowers, as it makes loan offers more attractive. Existing borrowers with repo-linked loans will also enjoy this automatic reduction without the need to approach their bank.

Will Fixed Deposit (FD) Rates Also Go Down?

While the news is promising for loan customers, it raises concerns for depositors. Historically, when the repo rate is lowered, banks tend to reduce Fixed Deposit (FD) rates to balance their interest income. While some banks have already signaled a possible adjustment in FD rates, the magnitude and timing of these changes may vary.

What Should Borrowers Do?

If you are planning to take a loan or thinking of refinancing your existing loan, this could be an ideal time to act. Experts suggest checking for the latest offers from various banks, especially those who are quick to pass on the RBI’s rate cut.

For existing home loan customers, the drop in EMI will likely reflect in the next billing cycle, although it’s always advisable to verify the new rate structure directly with your bank.

Conclusion

The RBI's decision to cut the repo rate has created a ripple effect across the banking sector, with several lenders slashing their interest rates in response. This move comes as a much-needed relief for both new and existing loan customers. Lower EMIs mean more disposable income for families, which can significantly ease financial stress, especially amid rising living costs.

If you're a borrower, keep an eye on your bank’s announcements and be ready to enjoy the financial benefits in the coming weeks!