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RBI MPC may cut the repo rate by 25 basis points to 5.75%, while SBI suggests a 50 basis point cut. This could lower EMIs for home, personal, and auto loans.
With another rate cut anticipated, the main question is whether home, personal, and education loans will become even cheaper.
RBI MPC Rate Cut: The Reserve Bank of India’s Monetary Policy Committee (RBI MPC) is scheduled to meet from June 4 to June 6 to decide on interest rates in India, amid global uncertainties. Most economists predict that the central bank’s rate-setting panel will opt for a 25-basis-point cut in the repo rate to 5.75%. However, SBI’s latest report suggests a 50-basis-point reduction.
The Reserve Bank of India has already reduced the repo rate by 50 basis points in the previous two monetary policy reviews, lowering it to 6%. The bank cut the rate by 25 basis points each in the February and April reviews.
With another rate cut anticipated, the main question is whether home, personal, and education loans will become even cheaper.
| Lender | Loan Amount | Loan Tenure | Current Interest Rate |
EMI | Revised Interest Rate (.25bps) | Revised EMI |
| HDFC Bank | 50 lacs | 30yrs | 8.45% | 38269 | 8.20% | 37388 |
Source: BASIC Home Loan
Atul Monga, CEO and Co-Founder, BASIC Home Loan stated that a stable and lower interest rate environment would not only improve affordability but also drive long-term momentum for home ownership, especially in the affordable and mid-income housing segments.
Scenario 1: 25 bps rate cut (Repo falls to 5.75%)
Suppose you have a home loan of Rs 30 lakh for 20 years at an 8.5% interest rate. After a 25 bps cut, your rate becomes 8.25%.
Impact:
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Your EMI drops by about Rs 470 per month
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Over 20 years, you save over Rs 1.13 lakh in total interest
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Personal and auto loan EMIs will also come down slightly
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New borrowers may get loans at better terms
Scenario 2: 50 bps rate cut (Repo falls to 5.5%)
Now, if RBI cuts the repo by 50 bps, your home loan rate may go from 8.5% to 8%.
Impact:
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EMI reduces by approx. Rs 950 per month
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Long-term saving of around Rs 2.3 lakh on a Rs 30 lakh loan
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Personal loans (often 11–16%) and auto loans (8–11%) will become more affordable
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Better cash flow for households
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
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