By: Ashish Kukreja, CEO and Founder

“The repo rate reduction is a massive relief for homebuyers in the form of equated monthly installments (EMIs) for their homes. This is the second rate cut in a row, following a 25 basis points cut in February. The repo rate reduction to 6% lowers the cost of funds for banks, enabling them to pass on the benefit to consumers through lending rates.

If a borrower has a home loan of ₹80 lakh with a tenure of 20 years and an interest rate of 9%, the EMI is approximately ₹71,978. With a 50 basis point reduction passed on by banks, the new EMI would be around ₹69,426, resulting in savings of ₹2,552 every month and about ₹30,624 annually. Over the loan term, this could lead to more than ₹6.42 lakh relief.

While new borrowers may see the impact more immediately, depending on how promptly individual banks revise their lending rates, existing borrowers will benefit from the revised rates on their next loan reset date. Given the ministry’s accommodating stance amidst global uncertainties, further repo rate reduction is anticipated.”