RBI Keeps Repo Rate Unchanged: What It Means For Your Home Loan EMIs

The Reserve Bank of India (RBI) had earlier lowered the repo rate, the rate at which it lends to commercial banks, from 6.5 per cent to 5.5 per cent through two cuts. It has now held the rate steady, choosing to observe how inflation and the broader economy evolve. Previously, the repo rate remained unchanged at four per cent between May 2020 and April 2022. From April 2022 to February 2023, the RBI gradually raised it to 6.5 per cent, where it stayed for two years before the recent easing.

As anticipated, the RBI has kept the repo rate unchanged, despite favourable factors such as a good monsoon and inflation remaining well below the comfort level. The decision appears to be guided by ongoing geopolitical uncertainties and unresolved global tariff concerns. So, as of now, home loan interest rates will remain unchanged.

“However, the cumulative 100 basis points cut over the last three monetary policy committee (MPC) meetings has already reduced borrowing costs significantly,” says Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution.

As noted by the RBI Governor, the full impact of these rate cuts is still unfolding, and we expect retail credit demand—particularly for home and personal loans—to gain further momentum in the coming months, driven by the upcoming festive season.

However, there are reasons to believe that the RBI may further reduce rates going ahead. “The encouraging news is that India’s economic growth continues to be resilient. If macroeconomic conditions remain stable and supportive, we anticipate the RBI may resume the rate cut cycle with a further reduction of 25–50 basis points during the remainder of this calendar year,” says Sushil Bedarwal, CMD, Bedarwal Group, a real estate developer.

The rate cuts have brought relief to homebuyers with a significant reduction in equated monthly instalments (EMIs). That said, overall, homebuyers are currently driven by long-term confidence rather than short-term rate fluctuations. “Given the upcoming festive season, developers may look to keep the market momentum going with offers and flexible payment plans, which may help improve affordability for many genuine buyers,” says Anuj Puri, Chairman, ANAROCK group.

For home loan borrowers, stable EMIs mean easier budgeting in the short term. If further rate cuts happen, refinancing or new loans could become even cheaper. So, if you are a financially disciplined homebuyer, now is the right time to buy your dream home.