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Banks drop home loan interest rates and EMI

Several banks have not yet passed the benefit of the repo rate cut by the Reserve Bank of India (RBI) in the last month. The few banks that have done so have reduced their home loan interest rates by 0.05 per cent to 0.1 per cent although the repo rate was cut by 0.25 per cent.

However, with Akshaya Tritiya falling in the month of May, some banks have extended ‘zero processing fee’ offers, to attract the home buyers. As many housing finance companies (HFCs) are facing a liquidity crisis, with banks reluctant to allow easy money to them after the default by IL&FS, it may be better for home loan seekers to opt for private or PSU banks over the NBFCs, for a better deal.

The monsoon prediction for this financial year is not encouraging, as El Nino may cause rainfall deficit in many areas. A weak monsoon usually results in higher inflation and an increase in interest rates. However, for now, the interest rate trend over the next few weeks will largely depend on the results of the general election and the trade deal between the US and China. The RBI is expected to reveal its next move after the election result is declared and till then, no major change in home loan interest rates is likely.

The EMI calculation by banks is based on a loan of Rs one lakh for a tenure of 20 years. You can easily calculate the EMI for the desired amount, by multiplying the loan amount (in Rs lakhs) with the EMI range. For example, the interest rate for Central Bank is 8.55 per cent per annum and the corresponding EMI for Rs one lakh is Rs 871. Now, if you want to calculate the EMI for Rs 30 lakhs, then, simply multiply the EMI with 30, i.e., Rs 871 x 30 = Rs 26,100 per month (approximately), which would be the EMI for 20 years tenure.

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