You need to have a daily check over increasing Repo Rate Impact Over EMI

The governor of RBI Urjit Patel has announced to increase repo rate by 25 basis points to 6.25 percent and reserve bank of India has also hiked reverse repo rate to 6 per cent. It is a very first hike of repo rate over EMI during prime minister Narendra Modis government of 4 years. The six members of monetary policy committee collectively take a decision to hike repo rate by 25 basis points.

Repo rate– It is the rate at which the central bank of a country ( reserve bank of India in case of India) lends money and provides a loan to the commercial banks.

Reverse rate- it is the rate at the which the reserve bank of India borrows money from commercial banks.

Repo Rate Impact Over EMI

Hike on repo rate will directly affect on borrowers as a bank will also hike the rate on loans and many major banks like SBI, ICICI, PNB has already raised marginal cost of fund based landing rate by to 0.1 percent before the announcement of RBI making home loans more expensive for the consumers.

Repo Rate Impact Over EMI

After increasing repo rate taking loans from banks will become most expensive and EMI will also be on higher side so if you are planning to take home loan for your new house and planning to take a new car using car loan and purchasing any other thing on EMI it will surely affects economy and financial budget of your family. For example- if you want to take home loan of amount of 30lac rupees for 20 years, you will have to pay 26,415 as new EMI after increase in repo rate with the new interest rate of 8.70 percent whether up till now you are giving EMI of 25, 939 Rs with an interest rate of 8.45 percent so there is overall increase in cost is 114, 240 which is costlier than earlier.

Lets take another example of car loan, if you take car loan of amount of 10lac rupees for 5 years, You will have to pay 21,371 rupees as an new EMI with interest rate of 10.25 percent after hike on repo rate of 10.25 percent whether up till now you are paying EMI of 21,248 rupees for the same amount with the interest rate of 10 percent. So overall increase in cost is 7,380 rupees which will surely have a big impact on consumer’s budget. So taking expert advice before opting for Home loan vary widely across banks and housing finance companies.” 

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