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Sunday, March 29, 2015

Interest rates and borrowers relationship

In a very simple way let's say that higher interest rate will lead to expensive borrowing while lowering of rates will help borrowers to get money and spend.
RBI may possibly announce rate cut in April so borrowers can plan for property buy, cars and appliances at lower interest rates.
There will be then significant reduction in EMIs for existing borrowers as well. For every reduction of 25 basis points in the repo rate a borrowers EMI goes down by Rs 16-18 per lakh for a tenure of 20 years. For example if your loan amount is say Rs 30 lakh for 20 years them EMI will be Rs 50o less per month ( Don't take loans unless necessary)

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