RBI Repo Rate Hike: Central Bank Increases Rate Ahead of Festive Season, Check How Much Your Home Loan EMI Will Increase

In a major development for borrowers, the Reserve Bank of India (RBI) has hiked the repo rate by 25 basis points, pushing it up from 5.25% to 5.50%. This policy rate hike, announced after the monetary policy committee meeting, comes after a gap of nearly four years and is set to make home loans, car loans, and personal loans more expensive across the board.

Impact on 20 Lakh, 30 Lakh, and 50 Lakh Home Loans

With the interest rates moving up by 0.25%, existing and new borrowers will witness an incremental rise in their monthly installments (EMIs):

• For a ₹20 Lakh Loan: At a 7.5% interest rate for 20 years, the EMI was ₹16,112. With the rate revised to 7.75%, the new EMI will be ₹16,419, translating to an extra burden of ₹307 per month.
• For a ₹30 Lakh Loan: The monthly EMI will go up from ₹24,168 to ₹24,628, requiring an additional outflow of ₹460 every month.
• For a ₹50 Lakh Loan: Borrowers paying ₹40,280 monthly will now shell out ₹41,047, which is an increase of ₹767 per month.

Expert Opinions on the Rate Hike

Industry experts believe that while the rate hike introduces a minor incremental cost, the overall housing demand, backed by the upcoming festive season, is expected to remain resilient. Real estate leaders note that premium segments and robust consumer confidence will cushion the market against any major slowdown, even though MSMEs and smaller borrowers may face tighter working capital conditions.