Brace for Higher EMIs for Your Home Loan! RBI Hikes Repo Rate - Here's What it Really Means for Borrowers

New Delhi: The RBI agreed to hike the repo rate by another 0.25% at its monetary policy meeting on February 8, 2022, prolonging borrowers' agony of escalating loan interest rates. Since May of last year, the central bank has increased the repo rate six times in a row. As a result, between May 2022 and February 2023, the repo rate increased generally by 2.5%, from 4% to 6.5%.

Even though the RBI has increased rates once again, the amount of increases has gradually decreased over the course of the last three MPCs, from 50 bps to 35 bps to now 25 bps. What will happen to house loan borrowers and what options do they have to lessen their EMI burden?

The benchmark lending rate has now reached a two-year high following the most recent hike. Following the RBI's first increase in the repo rate since August 2018 on May 4, 2022, banks and lending institutions have already increased interest rates on all types of loans. The stage is now set for lenders to follow suit as a result of today's decision, as the cost of borrowing will inevitably increase.

For instance, you took a loan of Rs 30 lakhs for 20 years on an interest rate of 7.6 percent. Now you have to pay an EMI of Rs 24,352.

Earlier you were supposed to pay an interest rate of about 7.1 percent. In that case, you have to pay Rs 23,439 per month.