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RBI Hikes Repo Rate by 0.25%; How Much Will EMIs for ?20 Lakh, ?30 Lakh, and ?50 Lakh Home Loans Increase?

Delhi: The Monetary Policy Committee of the Reserve Bank of India (RBI) has taken a significant decision today. After a gap of four years, the central bank has announced a hike of 25 basis points (0.25%) in the repo rate. Consequently, the repo rate has risen from 5.25% to 5.50%.
This decision is likely to lead to higher interest rates on home loans, vehicle loans, and personal loans. Specifically, for customers with floating-rate loans, the monthly installment (EMI) will increase directly, or the loan repayment tenure will be extended.
What is the exact impact on home loan EMIs? (20-year tenure)
If bank lending rates rise due to the repo rate hike, the impact on monthly installments will be as follows:

| Loan Amount | Old EMI (at 7.50% interest) | New EMI (at 7.75% interest) | Monthly Increase | Annual Additional Burden |
| :--- | :--- | :--- | :--- | :--- |
| ?20 Lakh | ?16,112 | ?16,419 | ?307 | ?3,684 |
| ?30 Lakh | ?24,168 | ?24,628 | ?460 | ?5,520 |
| ?50 Lakh | ?40,280 | ?41,047 | ?767 | ?9,204 |

Why the rate hike after four years?
The RBI had previously raised the repo rate in February 2023. Subsequently, the rate was kept steady at 5.25% across three consecutive meetings this year. However, the rate has now been raised to 5.50% with the aim of keeping inflation under control ahead of the festive season. Customers are advised to check how the bank passes on the rate hike; some banks increase the EMI, while others extend the loan tenure. If possible, the interest burden can be reduced by making additional repayments or partial prepayments.

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