The Impact of Repo Rate Changes on Your Home Loan EMIs

About this guide

Understanding how RBI's repo rate changes affect your home loan EMI is crucial for financial planning. This guide breaks down the connection and its implications for borrowers in India. What is the Repo Rate? The repo rate is the rate at which the RBI lends to commercial banks. It's a tool to control inflation and liquidity. Changes influence banks' borrowing costs, and subsequently, your loan rates. At RiteAssetz, we monitor these changes to advise our clients effectively. How Repo Rate Changes Affect Your Home Loan EMI: ✔ Floating Rate Loans (External Benchmark Linked): Most new loans (since Oct 2019) are RLLR loans, linked to the repo rate. An increase in repo rate raises your interest and EMI (or extends tenure). A cut lowers them. ✔ Older Floating Rate Loans (MCLR/Base Rate): Loans before Oct 2019 might be linked to MCLR or Base Rate. Their reset periods and sensitivity differ, but repo rate trends still influence them. ✔ Fixed Rate Loans: Repo rate changes generally don't impact EMIs during the fixed period. New fixed-rate loans reflect the current…