Finance Desk – The Reserve Bank of India (RBI) has recently made a crucial decision that impacts many of us, especially those with home loans or those looking to buy a home soon. On April 5, 2024, the RBI’s Monetary Policy Committee (MPC) chose to keep the repo rate steady at 6.50%.
What is the Repo Rate?
The repo rate is the interest rate at which the RBI lends money to commercial banks. A higher repo rate makes borrowing more expensive for banks, which in turn makes loans more expensive for us. A lower repo rate does the opposite.
RBI Decision On Repo Rate
Since the RBI decided to keep the repo rate unchanged, there won’t be an immediate change in your home loan EMI. This decision implies that the interest rates on loans, including home loans, will remain stable for the time being.
If your home loan has a fixed interest rate, you’re not affected by changes in the repo rate. However, if you have a floating rate loan, your interest rates move up and down with changes in the repo rate. Since there’s no change this time, your EMI stays the same.
Experts like Adhil Shetty from Bankbazaar.com and Atul Monga from Basic Home Loan explain that keeping the repo rate stable means that the lending rates from banks, including those for home loans, will likely not see a shift soon. This stability is good news for both current homeowners with floating rates and potential buyers, as it means predictability in monthly expenses.
According to industry experts like Manju Yagnik of Nahar Group and Boman R Irani of CREDAI, this decision is beneficial for the real estate market and prospective homebuyers. Stable interest rates help maintain affordability and consumer confidence, encouraging more people to invest in homes.
While the immediate effect of the RBI’s decision is stability, the future could bring changes depending on various factors like inflation and economic growth. The RBI might adjust the repo rate in the future to manage these aspects. If the rate decreases, and banks pass on this benefit, it could mean lower EMIs for home loan borrowers.
