Home, car loan EMIs to get costlier as RBI hikes repo rate by 25 basis points

RBI’s second-consecutive increase in repo rate comes as a bad news for those who have taken loans from banks. The Reserve Bank of India’s Monetary Policy Committee (MPC), in its third bi-monthly statement, hiked the key repo rate by 25 basis points (bps) to 6.50 per cent. RBI’s second-consecutive increase in repo rate comes as a bad news for those who have taken loans from banks. This is likely to lead to an increase in the interest bank customers pay on loans, be it home loan, car loan or personal loan.

Here’s how your EMIs are likely to be affected:

Assume you have taken a Rs 10 lakh home loan, which currently carries an interest rate of 8.40 per cent for 20 years tenure. That means that your EMI at present is Rs 8,615. But if your bank hikes its interest rate by 25 bps to pass on the burden of the repo rate hike, at 8.65 per cent interest rate your EMI will go up by Rs 158 to Rs 8773. For entire tenure the impact would be bigger as the borrower would need to pay Rs 38,007 more as interest of the loan.