The recent reduction in home loan interest rates—following the RBI’s 50 basis point repo rate cut—has a significant positive impact on property buyers, particularly in terms of monthly affordability, total interest savings, and overall buyer sentiment.
Let’s break down the impact with a real-world example of a buyer taking a home loan of ₹50 lakhs.
| Interest Rate | EMI (₹) | Total Interest Payable (₹) | Total Outgo (Principal + Interest) |
|---|---|---|---|
| 9.5% | ₹46,606 | ₹61,85,500 | ₹1,11,85,500 |
| 8.5% | ₹43,391 | ₹54,13,842 | ₹1,04,13,842 |
Lower EMIs reduce the monthly financial burden, allowing buyers to comfortably manage household budgets or consider slightly bigger or better-located properties.
Reduced interest rates increase a buyer’s loan eligibility, meaning one can qualify for a higher loan amount with the same income level—potentially enabling purchase of a better home.
For investors, lower rates mean higher rental yield-to-EMI ratios, making property investment more financially attractive.
Buyers can choose to maintain their old EMI amount and shorten the loan tenure, saving even more in total interest.
If your home loan is linked to the Repo Rate or External Benchmark, the benefit of rate cuts will reflect in your EMIs in the next reset cycle (typically every 3–6 months). If you're on a fixed rate loan, or your bank hasn't reduced rates yet, you might consider a balance transfer to a lender offering lower rates.
The recent fall in home loan interest rates significantly improves homeownership affordability, encourages fence-sitters to act, and enhances financial efficiency for both end-users and investors. Over the long term, even a 1% reduction can result in substantial savings for borrowers—making this an ideal time for serious property buyers to make their move.
