Will home loan EMIs fall as RBI holds repo rates? Do this now to ease burden of EBLR, MCLR, base rate and BPLR loans
interest rate has been pushed further, as the Reserve Bank of India (RBI) did not cut the repo rate. This is the fifth consecutive RBI Monetary Policy Committee meeting to keep the repo rate unchanged. This pause in repo rate increase started after a significant hike of 2.5% within a short span of 10 months during May 2022 to February 2023.
Home loan borrowers have been going through one of the most testing times as they have to pay almost 20% higher EMI than what they were paying just two years ago. When can home loan borrowers expect the interest rate to fall and how can they make the best of any future rate cut?
When will home loan EMIs fall?
The RBI went on a rate hike spree due to a steep rise in global inflation, after the Russia-Ukraine war started. With inflation subsiding from its peak, the expectation of a rate cut is gaining momentum.
While there may be greater uncertainty about when the rates will start falling, macro indicators show the grounds for a rate cut are getting stronger. Global inflation, which was primarily led by crude oil prices, has significantly subsided. From the highs of $115 per barrel seen in May 2022 after the Russia-Ukraine war started, WTI crude oil prices have fallen significantly. It did rise briefly, touched $91 per barrel in September 2023, but has since cooled down significantly to below $73 per barrel.
The biggest global indicator of interest rate movement is the 10-year US bond yield, which crossed 4.9% in October but fell to 4.22% after that. When it comes to the 10-year Indian government bond yield, the macro trend has been in a decline as it fell significantly from its peak of 7.45% in March. It again rose to a
