The Reserve Bank of India’s reported 25-basis-point repo rate hike to 5.50% has renewed concerns over home loan affordability, with borrowers facing the prospect of higher equated monthly instalments (EMIs), extended repayment tenures and increased borrowing costs.
Floating-rate home loan customers generally have the option of accepting higher EMIs or retaining their existing payments while extending their loan tenure. The impact can be significant during the initial years of homeownership, when buyers also manage stamp duty, registration, interiors and other household expenses.
Kotak Mahindra Bank’s Hybrid Home Loan offers eligible customers a fixed interest rate for 39, 52 or 65 months at pricing comparable to its floating-rate offering. During this period, the interest rate and EMI remain unchanged, before the loan shifts to a floating rate linked to the repo rate and a predefined spread.
Illustrations provided by the bank show that a 100-basis-point rate increase over 65 months could raise the EMI on a ₹1-crore loan from ₹74,550 to over ₹82,450 under the floating structure, while the hybrid EMI remains unchanged during the fixed period.
Nakul Saxena, Business Head – Mortgages, Kotak Mahindra Bank, said borrowers should assess their ability to absorb interest-rate fluctuations rather than focus solely on the initial loan rate.
In Kolkata, where homebuyers balance property prices with household budgets, repayment certainty could influence mortgage choices, particularly among first-time buyers. However, the actual benefit will depend on individual loan terms and future benchmark movements.