The Reserve Bank of India cut the repo rate by 50 basis points to 5.5%, decreasing EMIs for borrowers and making new loans more affordable. This move lowers the interest rate at which RBI lends to banks, typically leading to reduced consumer loan rates. Fixed deposit holders may experience decreased returns due to banks adjusting rates in response to policy changes.
The RBI’s repo rate cut is expected to reduce EMIs for existing borrowers and lower loan costs. For example, a ₹50 lakh home loan at 8.7% interest rate with HDFC Bank translates to a current EMI of ₹39,136. With the rate drop to 8.2%, your new EMI would be ₹37,346—saving you about ₹1,790 monthly or nearly ₹21,480 annually.
The RBI’s repo rate cut will impact personal loans, albeit with smaller savings compared to home loans. For instance, a ₹5 lakh personal loan at 12% for five years would have an EMI of ₹11,122. If the interest rate decreases by 50 bps to 11.5%, your new EMI would be ₹10,963, saving you around ₹159 monthly or nearly ₹1,908 annually.
The impact of the RBI’s repo rate cut on future personal loans will be determined by how individual banks choose to adjust their EMI loan rates. Loan interest rates consist of the MCLR and the spread, with the MCLR expected to decrease after the repo rate cut. However, the extent to which customers benefit from this rate reduction will vary based on each bank’s spread policies.
Sources News From Various Digital Platforms, Websites, Journalists, And Agencies.
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