Higher home loan EMIs after RBI repo rate hike; how you can cut total interest payout

Higher home loan EMIs after RBI repo rate hike; how you can cut total interest payout

Time to pre-pay your loans? With the Reserve Bank of India (RBI) raising the repo rate by another 35 basis points to 6.25%, your loan repayment math will change as well. This is the fifth rate hike by RBI this financial year, and is expected to translate into higher loan interest rates for borrowers. The good news, however, is that the rates may be close to peaking as experts see the RBI putting a stop to repo rate hikes in the coming months.

According to Vivek Iyer, Partner and Leader, Financial Services Risk, Grant Thornton Bharat, loan EMIs will rise further in the near future. “With the rise in interest rates continuously over the past 5 monetary policies, the deposit rates will see an uptick and to keep the Net Interest Margin balanced, the rate hikes will be passed to the borrowers which will result in an increase in the EMIs,” Iyer tells TOI.

So what should a borrower do? Experts believe that pre-paying your loan or hiking the EMIs further are possible solutions to the increasing interest burden.