Have a ₹50 lakh home loan? Check how much your EMI could rise after the RBI rate hike

The Reserve Bank of India (RBI) has raised the repo rate by 25 basis points to 5.50%, marking its first rate hike since February 2023. The decision comes amid inflationary pressures and global uncertainties, with the central bank seeking to balance price stability and macroeconomic conditions.

For home loan borrowers, the hike could mean higher monthly repayments if banks pass on the increase to lending rates. The impact will depend on the loan amount, repayment tenure, lender and interest rate applicable to the borrower.

For someone with a ₹50 lakh home loan, the monthly EMI could rise by ₹852 to ₹867 on a 30-year loan, depending on the lender, according to Atul Monga, CEO and co-founder of BASIC Home Loan.

Monga estimates that a 25-basis-point increase would raise the monthly equated monthly instalment (EMI) on a ₹50 lakh home loan with a 30-year tenure by ₹852 at a public sector bank, from ₹34,109 to ₹34,961. At a private bank, the EMI would rise by ₹867, from ₹35,821 to ₹36,688.

Raoul Kapoor, co-CEO of Andromeda Sales and Distribution, said home loan rates of around 7.15% are currently available to eligible borrowers. If the entire 25-basis-point increase is passed on, the rate would rise to 7.40%, increasing the EMI on a ₹50 lakh loan for a 20-year period, from ₹39,216 to ₹39,975.

The effect extends beyond the monthly repayment. Monga estimates that, over the full 30-year tenure, the additional interest outgo could be approximately ₹3.07 lakh for a public sector bank borrower and ₹3.12 lakh for a private bank borrower, assuming the loan runs for the entire period.

The actual impact will depend on whether the lender passes on the full rate hike, the interest rate applicable to the borrower and how repayments are adjusted.

The impact will also vary with the amount borrowed. Kapoor's calculations assume a current interest rate of 7.15%, which he said is available to eligible borrowers, rising to 7.40% after the full 25-basis-point increase is passed on. The estimates below show the potential effect on different loan amounts over a 20-year repayment period.

Under these assumptions, the EMI on a ₹1 crore home loan would increase by ₹1,516 a month, compared with ₹379 for a ₹25 lakh loan. These are illustrative estimates, as the interest rate offered to individual borrowers may differ.

Monga said the rate hike is unlikely to significantly alter homebuyer sentiment or long-term housing demand. He cited urbanisation, rising incomes and demand from first-time buyers, particularly in Tier II and Tier III markets, as factors supporting the housing sector.

For existing borrowers, Monga suggested considering a higher EMI instead of extending the loan tenure, as a longer repayment period can increase cumulative interest costs. He also suggested using annual savings or bonuses to prepay an additional EMI each year and exploring internal repricing options with lenders.

Kapoor said the actual impact would depend on the lender, loan benchmark and borrower profile, as well as whether the rate increase is reflected in a higher EMI, an extended tenure or a combination of both.

Ultimately, the increase in borrowing costs will depend on how lenders transmit the repo rate hike and adjust repayments. While the monthly difference may appear modest, the additional interest can become substantial over a long repayment period.

Kirti jha

Kirti Jha is a Senior Content Producer at Mint, where she writes on mutual funds, taxation, personal finance and macroeconomic developments. Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households. <br><br> Before joining Mint, Kirti worked at ET Money, where she specialised in mutual fund research and investment analysis. She tracked portfolio disclosures, fund manager strategies, sectoral allocation shifts and investment trends, distilling large datasets into investor-focused insights. Her work combined quantitative analysis with consumer-centric storytelling, enabling readers to better understand fund positioning, portfolio changes and long-term investment opportunities.<br><br> Kirti holds a Bachelor's degree in Economics from Indraprastha College for Women, University of Delhi, and a Master's in Finance from the Jindal School of Banking & Finance at O.P. Jindal Global University. Her academic training emphasised analytical thinking, quantitative research and financial decision-making, providing a strong foundation in understanding capital markets, financial systems and economic policy. With a combined experience in investment research and financial journalism, she is committed to producing accurate, accessible and insightful journalism that empowers readers to make well-informed financial decisions.

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HomeMoneyPersonal FinanceHave a ₹50 lakh home loan? Check how much your EMI could rise after the RBI rate hike

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