Today Reserve Bank Of India has reduced the repo rate by 0.5% which is a major repo rate cut in 2 to 3 years and thus it will help for people having or thinking of taking loan. At one point of time the interest rate of Home loan was as low as 6.5% but it kept on increasing.
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After the increase it went upto 9% at one point of time. And then when the inflation start to increase the Home loan start to decrease and now it has came down to around 8% or lower. So people having the Home loan will enjoy the 0.5% cut and now they have the option to reduce the EMI or reduce the tenure.
In my opinion reducing the tenure makes sense because then you can continue to pay the higher EMI or the EMI which you were paying and thus the interest on your loan will decrease.
Similarly if you have the cash in hand and don't want to pay the Home loan but want to keep it in FD, then the best time is now because the FD rates might also come down. So you can lock the best rate now and thus can enjoy the higher interest rate on your savings.
The other option is to keep your home loan EMI reduced and then then the extra money can be invested in the market. In this way your EMI will continue and along with thar you can invest little amount in the market. This investment in the market will fetch you 12%+ and thus can help you in the long term.
So it's actually a good move by the RBI and thus people will start taking more loans as well as with the less repo rate they will have more money to spend. So this is like a double benefit for salaried individual who have loans. Because with the new tax regime salaried people will have extra in hand income as well as with the interest rate going down they will have more cash in hand and thus spending will increase which is eventually good for the economy.
