Home Loan EMIs May Go Down Further In Oct-Nov

New Delhi: The EMIs for home loans are already headed southwards in the county and many go down further in the next 2-3 months. The Reserve Bank Of India (RBI) is expected to reduce the Repo Rate in October again in its next review of the monetary policy, according to a poll carried out by Reuters.  

The latest Reuters poll of economists carried out in 7-8 August predicts that the Repo Rate can come down by another 25 basis points to 5.15 percent, making room for the commercial banks to lower the interest rates on all kinds of loans including home loans.

It is fourth consecutive Repo Rate cut carried out earlier this week, the RBI brought the Repo Rate down to 5.4 percent which was followed by a slew of banks to announce a cut in their interest rates to the tune of up to 25 basis points for various types loans. Banks like State Bank Of India (15 basis points), Syndicate Bank (25 basis points), Bank OF India (25 basis points), IDBI Bank ( up to 15 basis points), Maharashtra Bank (10 basis points) and Allahabad Bank (15-20 basis points) have already announced a cut in their lending rates.

However, a Repo Rate cut by RBI to the tune of 25 basis points may not result in commercial banks cutting down their lending rates by the same quantum. The RBI has lowered the Repo Rate by 110 basis points in four consecutive rounds so far this year but the commercial banks have cut their lending rates only by 45-50 basis points. The reduction in lending rates by commercial banks so far have alrrady resulted in savings of Rs 10,000-15,000 per annum in home loan EMIs for borrowers and if there is a reduction in Repo Rate by RBI in October, there could a further savings of Rs 5,000-10,000 per annum for the borrowers.  

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