Will you have to less EMI now?
let's find out
Hey there,
You made it to Thursday, and we’ve got potentially great news if you’re paying off a home loan or planning to take one.
The Reserve Bank of India might just make your month easier by trimming your EMI.
Yes, really.
Let’s break it down…
📌 Will your EMI shrink soon?
The Reserve Bank of India’s Monetary Policy Committee (MPC) is wrapping up a three-day meeting this Friday, and all eyes are on one big decision: Will they cut the repo rate again?
If they do (as many expect), it will be the third straight rate cut in 2025. The repo rate currently stands at 6.25% after two previous cuts of 25 basis points, one in February and another in April.
A fresh cut could push the rate below 6%, a level we haven’t seen in years.
But what does that actually mean for you?
📌 Let’s talk home loan EMIs
If you’re repaying a home loan with a floating interest rate, this is great news for you.
Here’s why:
Repo rate = the rate at which the RBI lends to banks.
When the RBI cuts this rate, banks can borrow money cheaply. If banks pass on this benefit to you, they’ll lower your home loan interest rate, reducing your EMI.
But, and this is important , there’s no rule that banks must cut your rates in direct proportion. They can, and many do, but it’s not guaranteed.
That said, after the April rate cut, several banks like SBI, Indian Bank, PNB, Bank of Maharashtra, UCO Bank, and Bank of India did slash their lending rates. So history is on your side.
📌 But why is another rate cut expected?
Experts at SBI say the country's money situation is looking good right now.
There's enough money flowing in the system, prices of things aren't rising too fast (which means inflation is under control), and the financial markets are pretty steady.
In short, the economy is doing well enough to handle a cut in interest rates. And cutting the rate a little more could give it a nice push.
Usually, the RBI cuts the rate by 0.25%, but some experts believe this time they might go big and cut it by 0.50%.
📌 But, what about personal loans?
If you're hoping for your personal loan EMI to drop too, hold that thought. Here's the deal:
Most personal loans come with fixed interest rates, so existing loans won’t be affected by a repo rate cut.
However, if you're planning to take a new personal loan, you might get a better deal depending on how banks price them after the announcement.
Car loans and other floating-rate loans might also see some benefit.
📌 So, what should you do now?
If you’re already paying off a floating-rate home loan, wait and watch. A cut on Friday could mean savings in the next few months, only if your bank passes it on.
Thinking of buying a house soon? You might want to keep your documents ready, as lower interest rates mean better affordability.
And if you’ve got a fixed-rate loan? Well, no change there. But hey, at least now you know.
So, that’s it for today. If you enjoyed this edition, subscribe to hear from us every day!
See ya 👋
