How much will your EMIs increase on Rs 30 lakh home loan?

Repo rate hike: The Reserve Bank of India, in a bid to tame the spiraling inflation, has increased the repo rate once again by a whopping 50 basis points. After the apex bank’s policy rate hike — third in four months, the repo rate has reached its pre-pandemic level of 5.40 percent. Elaborating on the monetary policy committee’s decision, Shaktikanta Das said the consumer price inflation remained uncomfortably high.

The RBI governor added that India’s inflation projection for the current financial year would remain at 6.7 percent if the monsoon remains normal and the global crude prices don’t cross the 105-dollars-per-barrel mark.

What is the repo rate?

The repo rate is the rate at which the RBI lends money to banks. If the repo rate is high, the banks would have less money to lend, which in turn reduces the purchasing power of people. The reduction in purchasing power reduces demand which in turn reduces inflation. The Reserve Bank of India kept the repo rate low to spur growth that had been stemmed due to the pandemic’s cascading effects on the global economy. But since inflation has been maintaining its pace at more than 6 percent, RBI was forced to increase the policy rate. 

The RBI’s decision means the housing loan and car loan lenders will increase the EMIs. This would be the third time in a year that leading banks would hike the EMIs. What would be the impact of the repo rate hike on your EMIs?

If you have taken a home loan of Rs 30 lakh for 20 years, your interest rates would increase from 7.55 percent to 8.05 percent. In this case, your EMI will increase from Rs 24,200 to Rs 25,100, which is a hefty increase of Rs 900. This is a hike of around Rs 30 per lakh. 

Similarly, if you have taken a loan of Rs 40 lakh for 20 years, your EMI will likely increase by Rs 1,200. For those whose home loan amount is Rs 50 lakh, their EMI will increase by Rs 1,500.