Why will Home loan EMI fall in future?

One of the major concerns of anyone wishing to purchase a house is the huge interest rates and Equated Monthly Instalments (EMIs) on home loans. Paying the monthly instalments for housing loans taken by consumers prove to be a herculean task, considering the salary received by them against their monthly expenses. Although home loans are a great help to consumers, they tend to gradually add to our burdens by making us indebted to a great extent due to growing interest rates. In urban areas especially, taking home loans may seem more of a bane than a boon.

With the decrease in the repo rate i.e. the rate at which the central bank lends funds to a commercial bank in case of short fall, consumers can finally breathe a sigh of relief. Home loan EMI has reduced a great deal with the recent fall in the repo rate by 0.25% and is likely to reduce even further in the coming days.

The joy of the consumers however is not limited to just a reduction of 0.25% in the repo rate. Base rates are expected to fall even further which will lead to a prominent fall in home loan EMIs of leading house financing bodies such as PNB Housing, DHFL, and HDFC in the future. Analysts have also predicted a noticeable fall in EMI rates due to inflation remaining low for a long period of time. The low EMI rate would no doubt lead to increased number of people availing the benefits of these offering, thus augmenting purchase of properties and eventually boosting the economy of our country. With the possibility of the repo rate falling by an entire percentage point in the coming future, consumers who have taken home loans will save a considerable amount.

With some state-run banks already having reduced their base rates, others will soon follow, rendering it the beginning of a rate easing cycle. With a numerous factors contributing to the fall in the repo rate, the rate of EMIs on home loans are bound to keep falling, benefitting the masses immensely.