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March 24-27 MPC Meet – RBI Cuts Repo Rate by as Much as 0.75% to 4.40%, Home Loan EMIs Set to Fall

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The Reserve Bank of India (RBI) has cut the repo rate by as much as 75 basis points (100 basis points =1%) to 4.40% from 5.15% earlier, in a monetary policy meeting that got held on March 24-27, 2020. The move is in line with the problems caused to borrowers in the wake of the Covid-19 Coronavirus pandemic. The massive fall of the repo rate will have an effect on the EMIs of all floating rate loans such as home loans. While new borrowers will get the loans at a lower rate resulting in lower Equated Monthly Installments (EMIs), the existing ones will have the same EMI but their interest liability will come down rapidly as a result of this move.

What will also help lenders cut the rates is the decision of the apex bank to cut the Cash Reserve Ratio (CRR) by as much as 100 basis points to 3% from 4%. In addition, the RBI has allowed a moratorium period (EMI Holiday) of 3 months for retail loans. So, we can check the effect of the repo rate cut and 3-month moratorium on your home loans.

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SBI Home Loan Interest Rates to Fall as Low as 7.15%

As of now, the largest lender State Bank of India (SBI) offers the lowest home loan interest rates starting from 7.90% per annum. The 0.75% cut in the repo rate could see the interest rates falling to as low as 7.15% per annum. What’s even interesting to note is that the highest limit of SBI Home loan rates could be well below 8% i.e. 7.80% per annum, entailing huge savings for borrowers servicing home loan EMIs here as well as those wanting to take a loan from the noted public lender. Let’s check out the likely SBI home loan interest rates after this move.

Likely SBI Regular Home Loan Interest Rates from the Next Month Post the Repo Rate Cut

Home Loan AmountSalariedNon-salaried
Upto INR 30 Lakh7.15% - 7.30%7.30% - 7.45%
Above INR 30 Lakh - 75 Lakh7.40% - 7.55%7.55% - 7.70%
Above INR 75 Lakh7.50% - 7.65%7.65% - 7.80%

Likely SBI Top-up Loan Rates from the Next Month Post the Repo Rate Cut

Loan AmountSalariedNon-salaried
Upto INR 20 Lakh7.60%7.75%
Above 20 Lakh - 1 Crore7.80%7.95%
Above 1 Cr - 2 Cr8.00%8.15%
Above 2 Cr - 5 Cr8.45%8.60%
Above 5 Cr9.65%9.80%

HDFC Home Loan Interest Rates Could Start from as Low as 7.25%

HDFC Home Loan rates could also fall significantly after the latest rate cut made by the RBI. Even as HDFC Limited doesn’t follow the Repo Linked Lending Rate that banks do, it cuts the rate very much in line with its banking counterparts to survive in this intense rate cut war amongst lenders. This could so well make HDFC pass on the rate cut very much in the same proportion.

Likely HDFC Home Interest Rates from the Next Month Post the Repo Rate Cut

Top-up home loan rates of HDFC could change to 7.95%-8.45% from 8.70%-9.20% for existing customers. New customers will get as per the home loan slab rates.

ICICI Home Loan Interest Rates Likely to be as Low as 7.50%

ICICI Bank home loan interest rates could also fall rapidly post the massive 0.75% repo rate cut. As of now, it offers home loans at interest rates ranging from 8.25%-9.35%, almost at par with two heavyweights SBI and HDFC Limited. With the likely fall in rates, ICICI Home Loans could start from as low as 7.50% per annum.

Likely ICICI Home Loan Interest Rates from the Next Month Post the Repo Rate Cut

Home Loan AmountSalariedSelf-employed
Upto INR 30 Lakh7.50% - 8.15%7.75% - 8.40%
Above INR 30 Lakh - 75 Lakh7.65% - 8.30%7.85% - 8.50%
Above INR 75 Lakh7.85% - 8.50%7.95% - 8.60%

The change in the top-up loan rate will most likely mirror the rate changes made with respect to the regular home loan.

LIC Housing Finance Home Loan Could Slip to as Low as 7.35% Per Annum

One of the largest housing finance companies (HFCs) in India, LIC Housing Finance keeps the home loan rates to 8.10%-8.95% per annum, which could change to 7.35%-8.20% p.a. It offers the balance transfer facility at a reduced rate of 8.10%-8.40% per annum. If they do reduce the rate to the tune of the RBI repo rate cut, the rates on the balance transfer could fall to 7.35%-7.65% per annum.

Axis Bank Home Loan Interest Rates Likely to be as Low as 7.80%

Axis Bank is also not far behind the lenders mentioned above. Presently, it offers home loans at 8.55%-9.20% and 8.65%-9.40% to salaried and self-employed, respectively. The repo rate cut of today will most likely take the rate to 7.80%-8.45% for salaried and 7.90%-8.65% for self-employed.

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How Will the Change in Interest Rates Impact Both Existing and New Home Loan Borrowers?

New home loan borrowers will enjoy the benefits of lower rates with reduced EMI.Existing home loan borrowers will get the interest portion of their EMI getting reduced. It will mean the principal amount will get paid more, with EMI getting constant. A long phase of rate cut will ensure loans get closed faster than otherwise. However, despite the rate change, if you see your lender is still charging more than the average market rate, maybe you could search for a lender that can take over the outstanding loan balance at a lower rate. This will mean quite a significant savings for you. Read more about here https://www.wishfin.com/home-loans/how-to-manage-home-loan-after-coronavirus-slowdown/

How Will the 3-Month Moratorium Period Pan Out for You?

The RBI has also allowed a 3-month moratorium period on all retail loans. This will mean an EMI holiday for 3 months. Experts have different opinions on this move Some say one won’t need to get an approval from the bank as the repayment will be automatically shifted by 3 months, some are saying the bank will ask for a proof whether the coronavirus has disrupted the income of borrowers and so. In a few days, banks and NBFCs could clarify the situation. In case you have the money and are allowed to pay your loan dues, you better do. As the country is in the lockdown phase for 21 days and that may get extended if the coronavirus cases don’t reduce by that time, it will be better to use your savings on travel and food outside to pay off your dues. Those having serious concerns on the income side can take the benefit of the moratorium period and accumulate their savings that has only accentuated with no travel and outdoor expenses due to the 21-day lockdown that is in force now.

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Personal Loan Interest Rates May 2020
Fullerton India14.00% - 33.00%
HDFC Bank10.75% - 21.45%
ICICI Bank10.99% - 18.49%
IndusInd Bank10.99% - 16.00%
Kotak Bank10.99% - 20.99%
RBL17.50% - 24.00%
Standard Chartered Bank11.50% - 18.00%
Tata Capital10.99% - 18.00%

Home Loan Interest Rates May 2020
Axis Bank8.10% - 8.85%
Bank of Baroda7.25% - 8.25%
Citibank8.20%
HDFC7.75% - 8.65%
ICICI Bank7.70% - 8.80%
Indiabulls Housing Finance Limited8.80% - 11.05%
Kotak Bank8.20% - 9.25%
LIC Housing7.40% - 8.85%
Piramal Capital & Housing Finance9.00% - 9.10%
PNB Housing Finance8.95% - 9.20%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI7.35% - 8.00%
Tata Capital9.20% - 9.35%