Home Loan EMI Calculator: The retail inflation data declared for July 2024 has slipped below the Reserve Bank of India’s (RBI) tolerance band of 4 percent to 3.5 percent due to a decrease in inflation of food items. If this trend of reduction in retail inflation continues in the coming months, then people can get great relief from expensive loans. Taking education loans including home loans, car loans, etc. from banks can be cheaper. So the EMIs of the people who are running can be cheaper.
Loans will be cheaper from the second half!
Rajni Sinha, Chief Economist, CareEdge Ratings, said on the fall in inflation rate, retail inflation has come down to 3.5 per cent due to last year’s base effect, but core inflation has increased from 3.1 per cent in June to 3.4 per cent in July 2024, for which the increase in telecom tariff and increase in fuel prices in some states are responsible. He said, going forward, the base effect will not be in our favor in the months of August and September, due to which the trend of decline in inflation rate may change. He said, inflation rate is expected to average 4.8 per cent in 2024-25. And if food inflation comes down, we believe that the Reserve Bank of India can start cutting policy rates in the second half of the current financial year.
Loan became costlier by 2.50% in 9 months
Before May 2022, the RBI policy rate, which includes the repo rate, used to be 4 percent. But in April 2022, the retail inflation rate jumped to 7.8 percent. After which the RBI started the process of increasing the policy rates, which used to be 4 percent earlier. In the next six RBI Monetary Policy Committee meetings, the repo rate was increased from 4 percent to 6.50 percent. After the repo rate increased by 2.50 percent, banks and housing finance companies increased the interest rates on home loans. So the EMI of homebuyers who already had a home loan became expensive. During this period, apart from home loans, car loans, education loans and other personal loans also became expensive.
How much has the burden of EMI increased
Within just one year, homebuyers were burdened with expensive EMIs. Suppose a home buyer had taken a home loan of Rs 40 lakh in 2021 at a rate of 7 percent for 20 years, then he had to pay a monthly EMI of Rs 31,012. But after the RBI increased the repo, the banks made the loan expensive, after which the EMI increased to Rs 37,285. That is, the burden of EMI on home buyers increased by Rs 6273 every month and if we add it annually, then Rs 75,276 more EMI has to be paid for the last one and a half years. EMI became expensive by 20 percent. However, if the trend of reduction in inflation rate continues, then there can be relief from expensive EMI.
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