Covid-19 has adversely impacted the world economy, throwing millions out of employment, destroying businesses, sinking people deep into debt and hampering the growth of several countries.
As the economy races towards recession, the Indian government, too, has taken several steps to promote a fast recovery. Both the Reserve Bank of India and the Finance Ministry have announced loan relief packages, moratorium period extensions, exemptions from EMIs etc. for existing borrowers. Like other borrowers, people who have availed or are planning to avail of home loans can expect some changes in the interest rates or EMI payments.
RBI Repo Rate Cuts
To put the economy back on track and induce some liquidity in the market, the Reserve Bank of India recently made cuts to its repo rate. The repo rate, as declared by the apex bank in March, now stands at 4.4%, while the reserve repo rate is at 4%.
For housing loan borrowers, this slash in repo rates may prove to be a huge relief, as EMI amounts for buying a house are most likely to reduce with this cut. For prospective borrowers, too, the repo rate cut is happy news, since home loans will expectedly become cheaper.
Additional Read – RBI Cuts Repo Rate by 75 bps to 4.40% to Fight Covid-19
Home loan interest rates might also change for existing borrowers in the following manner.
- For loans linked to external benchmarks like repo rates and treasury bills, EMI’s are expected to lower. Since RBI requires banks to review and reset home loan rates once every three months, housing loan borrowers can expect their EMI’s to come down for the next three months.
- Loans linked to ‘Marginal Cost of Funds Based Lending Rate (MCLR)’ may or may not be affected by the repo rate cuts that RBI has announced. This is because MCLRs depend on both RBI’s repo cuts and internal decisions of the bank. The reset period for these loans is six months, which means that borrowers can expect a lowering of EMI only after their banks make changes to their rates.
- For home loans linked to the benchmark prime lending rate, the interest will most likely remain the same. Such borrowers should consider shifting to an external benchmark rate home loan.
All these future changes in home loan rates should promote more investment in the real estate market and revive the economy while fulfilling your dream of buying a house. If you are looking for easy home loans, apply for home loans with Tata Capital. We also offer home loans online, and our website includes a home loan EMI calculator to help you optimize your monthly repayment instalments.
At Tata Capital, we believe in being extremely transparent with our customers. Our home loan calculator will help you realize how much debt you need. You can also determine your home loan eligibility using our home loan eligibility calculator or by referring to the FAQ section on our website.
If you are looking for easy, affordable, and hassle-free home loan online or offline with minimal documentation, get in touch with us today.