Home loans, car loans to get costlier as RBI hikes repo rate

New Delhi : Bad news is here for those borrowers who have taken a car loan or home loan. The Reserve Bank of India (RBI) has increased its repo rate by 25 bps to 6.50%.

Earlier the apex bank had increased repo rate by 25 bps in June during its monetary policy, raising expectations to keep its key rates on hold in its August policy meet today.

Example of how home loan rates impact your EMIs:

Suppose, a Delhi-based person is looking for a housing loan of Rs 60 lakh for buying a house of Rs 80 lakh. If he takes a housing loan of Rs 60 lakh at 8.50% interest for 20 years, this would imply an EMI of Rs 52,069. Over 20 years, Mr Sardana would be paying Rs 64,96,654 as interest. A 25 bps increase in the interest rate would increase the EMI to Rs 53,022 and the total interest paid to Rs 67,25,434. A 50 bps rate hike, on the other hand, would increase the EMI to Rs 53,983 and the total interest payable to Rs 69,56,053. That's Rs 2,28,780 more in case of a 25 bps rate increase and Rs 4,59,399 more in case of a 50 bps rate hike.

Besides the RBI rate hike, a decline in the manufacturing sector macro-economic data - Nikkei India Manufacturing PMI - also dampened investors' sentiments.

According to market analysts, heavy selling pressure was witnessed in auto and banking stocks.

At 3.30 p.m., the wider Nifty50 on the National Stock Exchange provisionally closed at 11,346.20 points, lower by 10.30 or 0.09 per cent from its previous close. It had touched an all-time high of 11,390.55 points earlier in the day.

The barometer S&P BSE Sensex which had opened at 37,643.87 points, closed at 37,521.62 points, lower by 84.96 points or 0.23 per cent from its previous close of 37,606.58 points. It touched a fresh intra-day high of 37,711.87 points and a low of 37,432.91 points.

The top gainers on the BSE were Coal India, Tata Consultancy Services, Sun Pharma, ITC and Power Grid while Vedanta, Maruti Suzuki, Bharti Airtel, ICICI Bank and Tata Steel lost the most.