Will your home loan EMI come down after RBI's 25 bps rate cut?

Existing borrowers’ EMIs will change only when their reset date arrives. New borrowers will benefit
  • After RBI’s 25-basis-point (bps) rate cut, home loan rates are expected to come down. This is the third consecutive cut. 
  • Many banks have already fixed their benchmark rate – the marginal cost of funds-based lending rate (MCLR) – for the month, so revision of rates may happen only in July.
  • If possible, new borrowers should wait until the start of July to see if banks reduce rates.
  • Older borrowers will see a change in their equated monthly instalments (EMIs) only when their reset date arrives.
  • Many housing finance companies are under pressure, and their cost of funds has risen. Those in good financial health may pass on the benefit of this rate cut. Those that are not may keep their rates unchanged, or cut partially.
  • Compare your current home loan rate with the best rates available.
  • If there is a gap of 50 bps or more, and you have a considerable tenure left, you are likely to benefit from switching.
  • Opt for a bank that resets MCLR rates for borrowers every quarter. As rates are expected to come down in future, you will benefit.

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