RBI MPC: Home Loan EMI, interest rate to remain unchanged as Central Bank retains repo rate

New Delhi, Aug 6 (IANS) The Reserve Bank of India's Monetary Policy Committee (RBI-MPC) on Wednesday decided to keep the repo rate unchanged at 5.50 per cent after its bi-monthly meeting. 

Keeping the repo rate steady means the Equated Monthly Instalment (EMI) and interest burden on the home loan will not change.

In its last meeting, the MPC had lowered the repo rate by 50 basis points, bringing it down to 5.50 per cent from 6 per cent.

The RBI has cut the repo rate by 100 BPS between February and June this year, following which major banks have brought their Home Loan rates as low as 7.3 per cent.

Currently, home loan rates from top lenders such as the State Bank of India (SBI), Canara Bank, HDFC Bank, Bank of Baroda, and ICICI Bank start at 7.3–8 per cent.

“The RBI’s decision to maintain the repo rate at 5.5 per cent despite easing inflation reflects a cautious yet balanced approach to managing global headwinds and domestic stability. For the real estate sector, a status quo on rates ensures continued momentum in homebuyer sentiment and sustains the affordability factor in housing," said Prashant Sharma, President, NAREDCO Maharashtra.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said the decision would preserve affordability for homebuyers.

"For the real estate sector, the continuation of stable policy rates and surplus liquidity conditions provides much-needed predictability and helps preserve affordability for homebuyers. Notably, some banks have already reduced consumer home loan rates – a move that supports housing demand, especially in the mid-income and low-income segment – and more transmission of interest rates is underway,” said Baijal.

Amit Goyal, MD, India Sotheby’s International Realty said, "The RBI’s neutral policy stance, coupled with a 6.5 per cent GDP growth outlook and a softer inflation trajectory, reflects a steady macroeconomic confidence. Strong consumption and stable urban demand are already supporting India's housing sentiment."

Rajeev Radhakrishnan, CFA, CIO – Fixed Income, SBI Mutual Fund, believes that the RBI's decision was as per the expectation given the current geopolitical scenario.

"After the frontloading of policy actions in June, it was unlikely that the RBI would alter the policy rate or guidance in the August review. In an uncertain external environment, marked by trade and tariff disruptions that are likely to keep external demand subdued, the onus of sustaining growth largely rests on domestic policy measures and the evolution of domestic demand drivers," Radhakrishnan said.

--IANS

aps/rad