The current interest rate hike cycle began on May 4, 2022, when the Reserve Bank of India (RBI) increased the repo rate by 40 bps. This was the first hike in the repo rate after a gap of almost four years. The increase in May was followed by another rate hike in June, where reserve Bank of India Repo rate hiked by 50 bps. And today, on 5th August, RBI hiked the repo rate again by 50 bps for the third time. Consequently, within the last 93 days, the central bank has increased the repo rate by a total of 140 bps (50+90).

This means banks and other lenders are increasing home loan interest rates and increasingly paying it to the borrowers. “So far, commercial banks have transmitted policy rate hikes to borrowers, resulting in an increase in lending rates across sectors, including real estate. Today’s rate hikes will further tighten rates. Especially for the real estate sector. , third a subsequent rate hike could mean a fall in affordability and affect the sentiments of home buyers. With the cumulative rate hike till date, assuming full transmission, the affordability of a potential home buyer is reduced by around 11% i.e. With the ability to buy a house worth Rs.1 crore, the value has now come down to Rs.89 lakh, says Shishir Baijal, chairman and managing director, Knight Frank India.

Here’s how your home loan EMI has been affected after the latest repo rate hike: If you have an outstanding balance of Rs 30 lakh with a balance tenor of 20 years at 8% annual interest, your EMI will increase by Rs 941. Rs 25,093 to Rs 26,034. For every Rs lakh loan, you may have to pay an additional Rs 31.37 towards EMI.

“Developers are expected to take mitigation measures to mitigate the impact on homebuyer affordability. A rise in interest rates and subsequent transmission of these to home loan rates, while having the potential to impact demand, we expect Let us do that the latent demand for housing will mitigate the impact of the latest change in REPO rates,” Baijal said.