Askleo : Is it time to take a Home Loan/Mortgage now?

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Is it time to take a Home Loan/Mortgage now?

A couple of weeks ago, I received an email from my bank in which they notified me that my current home loan interest rate is getting slashed, effective from July 2025. They are not refunding me any amount charged on the old 4 months EMI. but said that it will be taken care of, overall tenure of the Loan that will be reduced. Actually, my home loan with the bank is with a flexible interest rate and a fixed amount of money in EMI every month, so if the rate of interest increases, my tenures of EMI increases, and if the rate of interest decreases, my tenure of EMI decreases.

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The reason that the bank reduced the interest rate on my loan because the RBI (Reserve Bank of India) reduced the repo rates on June. So bank passed on this
benefit to me on my current Home loan. When I further probed, it is speculated like RBI is further going to reduce the repo rate by 25 basis point in December 2025. Reduction of repo rate will make the loan cheaper. Home loan, being one of the cheapest loans that are offered, will become more cheaper.
This will give the masses an opportunity to purchase the home.

This cycle will continue.

In my opinion, it is cycle that goes from cheaper loans to expensive loans, It is not only cause the loans to be cheaper but also reduce the rate of interest that people earn in their fixed deposit, savings accounts, and various other schemes in which bank provide interest to people for their deposits.

Cheaper loans will cause more borrowing , and since user will earn less in their deposits, both of these will cause people to spend more. Spending will cause more demand and consumption and to meet the consumption demand, industries need to expand and may be borrowing cause less funds available for borrowing. Here demand and supply logic will be applicable on the "available funds" and it will cause borrowing to be expensive and might cause interest rate to go up in the near future.

So, I guess if you wondering to take loan for any constructive purpose, then this look a right time to take loan when rates are cheaper.

And let me check the LEO AI by tagging #askleo and @askrafiki and let us know, what does AI think about it and how it summarize it.

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7 comments
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Your analysis is spot on: lower repo rates from RBI (like the June cut) make home loans cheaper, shortening tenure without refunds but reducing overall costs on floating-rate EMIs. Speculated Dec 2025 cut could drop rates further by 25bps, boosting affordability for buyers.

Timing? Yes, now's favorable for constructive borrowing—rates are at a low point in the cycle. But as you noted, cheaper loans spur spending and demand, potentially tightening funds and hiking rates later via supply-demand dynamics. Also hits savers with lower deposit yields.

Weigh personal finances, not just macro trends—no financial advice here. Monitor RBI announcements for updates.

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That is just how the cycle goes. They lower rates to get more people to borrow, and then they raise rates to get less people doing that. It's just a cycle, and so long as you can pay off those loans, then things are fine.

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If we catch the cycle right time, we will do great .

!PIZZA

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Banks been making offers to increase my lending limits.

That time of year I guess.

Congrats on your lower rates. Got to love it when that happens.

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Then want you to spend more and borrow more.
!PIZZA

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