RBI has announced rate cut for the fifth consecutive time since 2017. As a result, the repo rate currently stands at 6% while the reverse repo stabilised at 5.75%. With this rate cut, it is expected that the lending institutions will pass on the benefit to their customers as well, especially for home loan borrowers who are likely to enjoy considerable reduction in home loan interest rate.

How will the rate cut impact loan borrowers?

The rate cut is likely to benefit the loan borrowers in the following way –

  • For existing customers
Loans are likely to be linked to MCLR; therefore, with the reduction in repo rate, applicable rate of interest is also likely to drop. In case your loan is already linked to MCLR, you can directly benefit from rate cut. On the other hand, if your loan is linked to BPLR, you may shift to MCLR.

As a result, your home loan interest rate will reduce, leading to a further decrement in the EMI amount. Availing a home loan will thus become considerably affordable.

  • For new customers
When you are applying for a new loan, you will be charged as per the latest reduced rate of interest. So you can directly repay the amount according to the reduced home loan interest rate.

Make sure you fulfil the eligibility criteria before apply for the loan. Also, there might be a few hidden charges on your home loans you must know about beforehand so as to be able to manage your finances well.