A 25-basis-point rise in the policy rate is likely to push home loan interest rates up 10-15 basis points in the near term, with EMIs expected to rise.

While the rate hike was along expected lines, the industry stakeholders including borrowers were hoping for some relief from the Union budget.

A borrower with a Rs 30 lakh home loan at an interest rate of 8.5 per cent for 240 months could end up paying Rs 476 additionally on EMI every month with a 25 basis points increase, assuming the entire transmission of interest rate (see chart).

“The rates had already crept up after five consecutive hikes. Apart from home loan interest rates, property prices have also inched up in the past two to three quarters. Given that interest rates may breach the 9.5 per cent mark with today’s hike, we may see some pressure on sales volume in the affordable and lower-mid range housing segments, which are more cost conscious,” said Anuj Puri, chairman Anarock Group.

“With MCLR of 8.4 per cent, about 60 per cent of the repo rate hike, so far, has already transmitted into lending rates. Thus, the borrowing costs have significantly increased. Post today’s rate hike, borrowing costs could be expensive by around 10-15 basis points, on an immediate basis,” said Shishir Baijal, chairman and managing director, Knight Frank India.

“We hope that this rate hike will not adversely impact consumer sentiments towards home purchases in the coming financial year,” said Baijal. “Some of the ways that borrowers can counter the increase in interest rates include opting for a longer loan tenure, making higher down payment, balance transfer to another lender,” said Atul Monga, founder and chief executive officer of fintech firm Basic Home Loan.