Aman Gupta, Director of RPS Group

While the RBI's 50 bps cut will have an immediate impact on an EMI reduction, it is also opening doors of opportunity for homeowners to strategically reposition themselves. Borrowers with a ₹30 lakh loan of 20 years will see a decrease in their EMI of about ₹1,176 per month, and the best part is borrowers then have the choice they can either reduce their EMIs or as being discussed herein, retain their current EMI repayments to reduce the length of tenure and hence earn a greater interest saving. As outlined previously, both the State Bank of India and the Punjab National Bank passed on rate cuts of only 25 bps since April, after all have 36% of loans are considered and adjusted on the rates based on 4 months old MCLR (marginal cost of funds-based lending rate) values. For those considering refinancing with other banks it should also be considered if de-linking your variable rate loan from MCLR will automatically provide you with future benefit from the shift changes in the repo rate when it occurs? As the RBI is now signalling a neutral stance, it is unlikely PMI will increase any time soon; conversely, we can see how shifting monsoon patterns may impact inflation consideration going forward and ultimately limit windows for refinancing or transferring loan balance limitations.