Home Loan EMI Calculator: Impact Of RBI Rate Hike On Rs 15L, Rs 25L, Rs 30L, Rs 50L, Rs 75L and Rs 1 Crore Loans

Home loan EMIs are likely to rise following the Reserve Bank of India's decision to hike its repo rate by 25 basis points to 5.50% on Wednesday. Borrowers with floating-rate home loans are likely to feel the impact first, as banks may pass on the higher rate. New borrowers could also face higher loan costs.

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The RBI's Monetary Policy Committee, which held its three-day meeting from Oct. 5 to 7, took the decision after reviewing aspects such as inflation and economic growth. Fresh tensions in the Middle East between the US and Iran, higher crude oil prices and concerns over food inflation, prompted the central bank to take the measure in a bid to tame inflation. Consumer inflation picked up in August to 4.82%, above the RBI's 4% medium-term target for a ​third consecutive month.

Why RBI Hiked Rate?

On the move, Malhotra said during a post-meeting press conference: “The sudden re-escalation of the West Asia conflict in September and the consequent hardening, as well as volatility in global crude prices, soured global economic sentiments and heightened financial market volatility. Although global growth remains resilient, it is projected to decelerate this year with respect to the previous year. Driven by escalating energy costs and rising food prices, global inflation is projected to increase sharply, prompting monetary policy tightening by major central banks across the world….”

The RBI last raised the repo rate in February 2023, by 25 basis points to 6.50%. It then kept rates unchanged through 2023-24 before starting its rate-cut cycle in 2025.

How RBI Rate Hike Will Impact Home Loans:

For borrowers with fixed home loans, the MPC decision will not have any impact. However, borrowers who opted for floating home loan interest rates will likely pay higher EMIs. This is because floating rates are linked to external benchmarks, such as the repo rate. 

Since the RBI has hiked the rate by 0.25%, borrowers will likely see a similar hike in their interest rates, if the banks decide to pass on the full cost. This means that if your home loan interest rate earlier stood at 8%, it will now likely rise to 8.25%.

Here's What That Means For EMI:

Assuming all these loans have a 20-year tenure at 8% existing rate and the bank decided to pass on the full cost, the new EMIs could look like:

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