By The deccan pulse 
In a significant move, the Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points to 6.25%, the lowest in five years. This decision is expected to bring cheer to homebuyers and borrowers, as it may lead to a decrease in home loan EMIs. The rate cut is seen as a measure to boost economic growth, which has been slowing down in recent times.
What is Repo Rate and How Does it Affect You?
The repo rate is the rate at which the RBI lends money to commercial banks. A reduction in the repo rate makes borrowing cheaper for banks, which in turn can lead to lower interest rates on loans and credit cards. This can increase consumer spending, boost economic growth, and create jobs. For homebuyers, a lower repo rate can result in lower EMIs on their loans, making their dream of owning a home more affordable.
Experts Weigh In
“The RBI’s decision to cut the repo rate is a positive step towards reviving the economy,” said Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at State Bank of India. “With inflation under control, this rate cut can help increase consumer spending and boost growth.”
आरबीआई की मौद्रिक पॉलिसी में बड़ा एलान
-रेपो रेट 6.5% से घटाकर 6.25% किया गया
-पांच साल बाद घटाया गया रेपो रेट
-अब होम लोन की EMI में कमी के आसार #rbipolicy #RepoRate#RBIMonetaryPolicy pic.twitter.com/OO6KnjpGxm— Anjali (@anju1608) February 7, 2025
Impact on Home Loan EMIs
According to experts, a 25 basis point reduction in the repo rate can lead to a decrease of around ₹1,500 to ₹2,000 in the EMI of a ₹30 lakh home loan with a 20-year tenure. This can be a significant saving for homebuyers, especially those who are struggling to make ends meet.
Economic Implications
The RBI’s decision to cut the repo rate is seen as a measure to counter the slowing down of economic growth. According to a report by the International Monetary Fund (IMF), India’s economy is expected to grow at 7.3% in 2020, down from 7.4% in 2019. The rate cut is expected to boost consumer spending, increase investment, and create jobs, which can help revive the economy.
Conclusion
The RBI’s decision to cut the repo rate is a welcome move for homebuyers and borrowers. With interest rates set to fall, it’s a good time to consider taking a home loan or shifting to a cheaper loan option. However, it remains to be seen how commercial banks will respond to the rate cut and pass on the benefits to their customers. One thing is certain, though – this move is a step in the right direction towards boosting economic growth and making loans more affordable.