Home loan EMIs may fall 3.5% this year despite RBI MPC holding repo rate

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Key Points

Home loan borrowers wait for a fall in their EMIs got longer with the RBI deciding to keep the repo rate unchanged for the sixth consecutive MPC meeting since February 2023..

"On monetary policy, we build in a shallow rate cut cycle of 50bps from Jun-24, in our base case, even as we continue to remain watchful of risks from stronger-than expected growth (strong credit growth), which may defer the rate easing cycle," says the Morgan Stanley report...

This will give much needed relief to old home loan borrowers who have seen their interest rate rise sharply within the last 3 years...

This is important for borrowers with government banks where a large percentage of loans continue to be on older benchmarks such as MCLR and base rate where interest rates may be marginally higher compared to the repo-benchmarked loans we have today..

Even a minor reduction in interest rate may offer a big saving in the long run.. "Home loan rates are already lower compared to 2023 levels where they had started touching 9%..

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