RBI’s rate cut on home and personal loans?

In what ways can you benefit from RBI’s rate cut on home and personal loans? If there is a cut in the interest rates, can your EMIs come down? We explain RBI Rate Cut: On April 9, the Reserve Bank of India Governor Sanjay Malhotra announced that the RBI will reduce the repo rate by 25 bps to 6 per cent immediately. Additionally, the Monetary Policy Committee of the RBI changed its stance from a ‘neutral’ to ‘accommodative’

.The rate cut comes after the RBI, in February, lowered the interest rate by 25 bps to 6.25 per cent from 6.5 per cent for the first time in nearly five years.

Anil Rego, Founder and Fund Manager at Right Horizons explains that “the move by the RBI is likely to reduce borrowing costs, improve liquidity, and also strengthen domestic/investment demand and help rural prospects” Experts believe that the transmission from banks will reduce home loan interest rates by around 8 per cent, offering significant mailing space for common borrowers. Umesh Gowda HA, Founder-Chairman, Sanjeevini Group, states that “the two successive rate cuts will boost the housing sector as banks will pass on the rate cut leaving most home loans falling under 8 per cent, benefitting a large segment of new home buyers/residents and home owners.”

Effect on Borrowers This rate cut will almost certainly result in reduced equated monthly installments (EMIs) for borrowers on outstanding loans, including home loans and personal loans. While it is expected that banks and financial institutions will pass on the benefit of a reduced repo rate, the cost of credit should decrease as a result of a reduced cost of borrowing the funds.