Home loan borrowers in India may anticipate potential relief in their Equated Monthly Installments (EMIs) starting in April 2025. Experts suggest that the Reserve Bank of India (RBI) is likely to initiate a series of repo rate cuts in response to recent economic indicators.

Economic Indicators Prompting Rate Cuts

The GDP growth for the quarter ending September 2024 was recorded at 5.4% year-on-year, a notable decline that has intensified calls for monetary easing. In response to liquidity concerns, the RBI has already reduced the Cash Reserve Ratio (CRR) from 4.5% to 4%, freeing up additional funds for banks to lend, which is expected to make loans more affordable.

Projected Rate Reductions

Analysts have varying projections regarding the extent of the anticipated rate cuts:

HSBC Research anticipates two repo rate cuts of 25 basis points each in February and April 2025, bringing the repo rate down to 6%.

Impact on Home Loan Borrowers

A reduction in the repo rate typically leads to lower lending rates for consumers. For instance, a 100 basis point decrease could significantly reduce EMIs on home loans. Borrowers are advised to review their loan agreements and consider switching to external benchmark-linked lending rates (EBLR) to fully benefit from the anticipated rate cuts. Additionally, refinancing existing loans could be a viable option to secure more favorable terms.