Reserve bank of india (RBI) repo rate cut: The RBI made the surprise announcement on friday that the 50 BPS repo rate would be reduced to 5.50 percent. Following the three-day RBI MPC meeting, RBI governor Sanjay Malhotra declared a reduction in repo rates that was greater than anticipated. According to tax and financial experts, this will impact both new home loan borrowers and holders of bank fixed deposit (FD) accounts.
What do experts say?
According to the experts, the RBI's decision to decrease the repo rate is expected to help new home loan borrowers by lowering their monthly EMI if banks pass this relief on to their customers. According to them, the monthly housing loan EMI calculator can show roughly ₹2,000 less if a borrower has taken out ₹50 lakh for 20 years. Analysts predict that after the RBI's repo rate change across tenors, bank FD investors may suffer a decline in returns.
Cut RBI Repo Rate Impact on home Loan
About how this RBI repo rate cut would affect one's monthly home loan EMI, Annuj Goel, Managing director at Goel ganga Developments, told Mint, "Although the RBI's 50 bps repo rate cut has been bold and visually striking in terms of allowing savings for its lenders, the repo rate N/O is at 5.5%, so home loan borrowers can save from the increase."
The way the arrangement works is that you could save just under ₹4.7 lakh over the course of the loan, or roughly ₹1,960 off the monthly EMI if you had a loan of ₹50 lakh for 20 years.
In response to a question about how much relief a borrower would receive if they had taken out a home loan of ₹30 lakh for 20 years to Mint, Aman Gupta, director of RPS Group, explained, "Home loan borrowers with a ₹30 lakh loan of 20 years will see decrease in their EMIs of about ₹1,176 per month, and the best part is borrowers then have the choice they can either reduce their EMIs or as being discussed here, retain their current EMI repayments to reduce the length of tenure and hence earn a greater interest saving."
New house Loan with New Interest Rate
Pankaj Mathpal, MD & CEO of Optima Money Managers, said, "The RBI has cut the repo rate by 25 bps in february and april also," referring to the overall advantage that a new home loan borrower would receive after the RBI's repo rate cut in 2025. Those who have put off buying a home in recent quarters now have a great opportunity to do so because the RBI has lowered the repo rate by 100 basis points (25 + 25 + 50) in 2025. They will receive a monthly EMI reduction of roughly ₹3,800 to ₹4,000 on a home loan of ₹50 lakh for 20 years.
Negative Impact on FD Returns
Speaking to a media site, Mint, Pankaj Mathpal of Optima Money Managers discussed the possible harm that this repo rate reduction could have to bank FD rates. He stated that banks would reduce FD rates for all tenors after notifying their customers of the decision. Because prior bank FD accounts are not impacted by changes in bank FD rates, it is advised that senior citizens and other bank FD investors register an account immediately. If they don't take advantage of this opportunity, they can examine time deposits at the post office and small savings programs.
What do experts say?
According to the experts, the RBI's decision to decrease the repo rate is expected to help new home loan borrowers by lowering their monthly EMI if banks pass this relief on to their customers. According to them, the monthly housing loan EMI calculator can show roughly ₹2,000 less if a borrower has taken out ₹50 lakh for 20 years. Analysts predict that after the RBI's repo rate change across tenors, bank FD investors may suffer a decline in returns.
Cut RBI Repo Rate Impact on home Loan
About how this RBI repo rate cut would affect one's monthly home loan EMI, Annuj Goel, Managing director at Goel ganga Developments, told Mint, "Although the RBI's 50 bps repo rate cut has been bold and visually striking in terms of allowing savings for its lenders, the repo rate N/O is at 5.5%, so home loan borrowers can save from the increase."
The way the arrangement works is that you could save just under ₹4.7 lakh over the course of the loan, or roughly ₹1,960 off the monthly EMI if you had a loan of ₹50 lakh for 20 years.
In response to a question about how much relief a borrower would receive if they had taken out a home loan of ₹30 lakh for 20 years to Mint, Aman Gupta, director of RPS Group, explained, "Home loan borrowers with a ₹30 lakh loan of 20 years will see decrease in their EMIs of about ₹1,176 per month, and the best part is borrowers then have the choice they can either reduce their EMIs or as being discussed here, retain their current EMI repayments to reduce the length of tenure and hence earn a greater interest saving."
New house Loan with New Interest Rate
Pankaj Mathpal, MD & CEO of Optima Money Managers, said, "The RBI has cut the repo rate by 25 bps in february and april also," referring to the overall advantage that a new home loan borrower would receive after the RBI's repo rate cut in 2025. Those who have put off buying a home in recent quarters now have a great opportunity to do so because the RBI has lowered the repo rate by 100 basis points (25 + 25 + 50) in 2025. They will receive a monthly EMI reduction of roughly ₹3,800 to ₹4,000 on a home loan of ₹50 lakh for 20 years.
Negative Impact on FD Returns
Speaking to a media site, Mint, Pankaj Mathpal of Optima Money Managers discussed the possible harm that this repo rate reduction could have to bank FD rates. He stated that banks would reduce FD rates for all tenors after notifying their customers of the decision. Because prior bank FD accounts are not impacted by changes in bank FD rates, it is advised that senior citizens and other bank FD investors register an account immediately. If they don't take advantage of this opportunity, they can examine time deposits at the post office and small savings programs.
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