- RBI’s decision on interest rates, will your home loan EMI be affected? Learn how to reduce the burden
Repo Rate Home Loan Interest Rate: If there had been a hike in the repo rate this time too, the average interest rates on home loans would have reached an all-time high. Home loan interest rate has already increased from 6.7 percent to 8.75-9 percent per annum.
Repo Rate Home Loan Interest Rate: If you have taken a home loan, then you can take a sigh of relief. The Reserve Bank of India (RBI) announced its Monetary Policy (RBI MPC) on Thursday, in which there has been no change in the repo rate. The current repo rate remains at 6.50% (RBI repo rate). Due to this, there will be no increase in your home loan installments this time. The repo rate was continuously increasing in the last six MPC meetings, due to which home loan installments have become costlier. Had there been a hike in the repo rate this time too, the average interest rates on home loans would have reached an all-time high. Home loan interest rate has already increased from 6.7 percent to 8.75-9 percent per annum. But for now, you can heave a sigh of relief regarding future inflation.
How does increasing the repo rate by RBI affect your home loan? Repo rate home loan
Repo Rate means- Repurchasing Option or Repurchase Agreement. This is a lending rate at which commercial banks borrow from RBI. Whenever RBI increases the repo rate, it increases the burden of interest rates on banks. Repo rate is a kind of benchmark, on the basis of which other banks determine the interest rate of loans given to common people. When the repo rate increases, banks get loans at a higher interest rate. In such a situation, banks also increase the interest rate of home loans, car loans,s and personal loans for the common man and this affects the EMI. That is, with the increase in the repo rate, the EMI also increases.
What will be the effect on your home loan after today’s decision? home loan EMI
Now since there is no increase in repo rate, banks will continue to get loans from RBI at the same rate at which they have been taking them in the last two months, due to which their interest rate has not increased that they have to adjust it, in this case, they will not increase interest even on the home loan.
What to do if home loans are still costlier?
Despite no increase today, if your loan is spoiling your budget, then you can adopt some methods for this.
1. Switch Banks
If your bank is giving you a very expensive loan, or if the bank has made its loan very expensive in the last few months, then you can switch banks and go to a bank whose rates are slightly lower. You have to pay a processing fee for this. Many banks give you this facility.
2. Get your loan refinanced
If your loan has become costlier after taking the loan, then you can get the loan refinanced at lower interest rates. This will reduce your monthly EMI cost, and also reduce the total interest.
3. Increase the down payment
If you are going to take a loan, then you can also reduce the EMI burden by increasing the amount of your down payment, as this will also reduce your principal amount and monthly payment.
4. Choose the option of taking a loan with a fixed rate
If you are going to take a loan now, then you can take a loan at a fixed rate. Banks give you a loan at a fixed rate, in which the interest rates on your loan remain the same whether the repo rate increases or not. You get benefits on this when the interest rates are continuously going up.
