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RBI cuts the repo Rate by 25 bps. Impact on Repo Rate linked Home Loans

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1. The bank will update their rates within a week usually
2. If your loan is on floating rate of interest, it will reduce automatically else you will have to request.
 
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kumars_001 said:
Will my home loan interest be reduced with recent RBI ratecut ?
When I emailed my home loan provider Bajaj housing finance, theresponded this and I really don't understand this. Can anyone explain?

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As per the letter... Your home loan emi will not be reduced immediately. They will tell u when they decide to reduce, if at all. U can expect a reduction of 40% - 60% of the repo rate reduction but on a later date.

If, repo rate decreased by 0.25% then ur interest may reduce by 0.10% - 0.15% only.
That's too when there designated comittee members will get an invite too meet and take that decision.

These financial institutions act quicker to raise rate but will be very lazy in reducing those rates. Don't expect much.
 
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Your Home loan is floating rate but not linked to Repo Rate of RBI. FRR is benchmark separately decided by Bajaj finance on the basis of some set parameters. being as a NBFC bajaj finance is also not liable to follow the directions of RBI which mandates the bank to link the interest rate with some benchmark like Repo Rate, 3 months treasury yield, 6 months treasury yield. so its totally depends on Bajaj finance internal committee to change the FRR.
 
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There is already thread on the same. @kumars_001 , Please search on forum before creating a new thread. Happy TFing.

That_average_guy

Thread 'RBI cuts the repo Rate by 25 bps. Impact on Repo Rate linked Home Loans'

RBI has cut repo rate by 25 bps.
Source:- https://www.moneycontrol.com/news/b...ew-rbi-governor-sanjay-malhotra-12933114.html

Just wanted to know how and when will this affect the current ongoing home loans.
  1. How much time it takes to reflect this to the banks? (days, weeks, months?)
  2. Will banks lower the current home loan rates automatically or we have to manually raise request.
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It seems no one has clear idea of how and when this new rate would be applied. I checked with SBI CC and person said bank has not received any circular yet. He also said these things are quarter driven so change might be applied from next quarter.
This article says it might be immediate or in near future- https://www.indiatoday.in/business/...l-it-get-cheaper-explained-2677556-2025-02-10
Also one more article mentioned there might some more rate cut in the current year (maybe around 50 bps till end of 2025).
 
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That_average_guy said:
It seems no one has clear idea of how and when this new rate would be applied. I checked with SBI CC and person said bank has not received any circular yet. He also said these things are quarter driven so change might be applied from next quarter.
This article says it might be immediate or in near future- https://www.indiatoday.in/business/...l-it-get-cheaper-explained-2677556-2025-02-10
Also one more article mentioned there might some more rate cut in the current year (maybe around 50 bps till end of 2025).
Click to expand...
Well, there is no straightforward answer for this query. Every bank has different interest rate options, and your rate change after a repo rate change is dependent on what type of loan it is. If you assume the most common MCLR rates, which are used for home loans there are additional factors that play a part in the final rate published by the bank. However, all banks are required to publish the interest rate history and you can sort of guess when your bank might publish the updated rates on the basis of that. My loan is with BOB and they seem to update their rates on every 12th of the month. The same can be found here: https://www.bankofbaroda.in/interest-rate-and-service-charges/retail-loans-interest-rates

You can search the same for your bank.
 
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mayankcse10 said:
Well, there is no straightforward answer for this query. Every bank has different interest rate options, and your rate change after a repo rate change is dependent on what type of loan it is. If you assume the most common MCLR rates, which are used for home loans there are additional factors that play a part in the final rate published by the bank. However, all banks are required to publish the interest rate history and you can sort of guess when your bank might publish the updated rates on the basis of that. My loan is with BOB and they seem to update their rates on every 12th of the month. The same can be found here: https://www.bankofbaroda.in/interest-rate-and-service-charges/retail-loans-interest-rates

You can search the same for your bank.
Click to expand...
BOB did not update the MCLR rates yesterday so no change for me.

You may read the article below if you want to get into more details:
www.businesstoday.in

Repo rate-linked loans drop fast, but MCLR and new loans may lag—when will your home loan EMI fall post RBI rate cut?

With the recent 25 bps reduction in the repo rate, banks are expected to lower home loan rates for both new and existing borrowers. But the key question remains: How soon will this rate transmission take effect?
www.businesstoday.in www.businesstoday.in
 
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