RBI Repo Rate Status Quo: What It Means For Your Home Loan EMIs?

RBI MPC Meeting December 2023: The Reserve Bank of India (RBI) on Friday, December 8, kept repo rate unchanged, maintaining status quo on the previous policy. Experts said the RBI’s latest decision is a positive development for the housing market, as it will ensure EMI stability for borrowers.

Check LIVE updates on RBI’s December 2023 MPC here

Apart from the repo rate, the RBI MPC has also decided unanimously to keep the Standing Deposit Facility unchanged at 6.25 per cent and the Marginal Standing Facility rate and the Bank Rate at 6.75 per cent.

With RBI maintaining status quo, home loan interests are likely to remain unchanged, bringing slight relief for those paying home loan EMIs.

Home Loan Rates

Reacting to RBI’s decision, Mohit Jain, Managing Director, Krisumi Corporation, said, “The Reserve Bank of India’s wise decision to maintain interest rates aims to tame inflation within its targeted range. This translates to a welcome pause in the upward trajectory of bank-offered home loan rates, thereby ensuring EMI stability for borrowers.”

He said this positive development bodes well for the housing market, as it fuels continued momentum in sales across various property segments, including affordable, mid-range, and luxury housing throughout various regions for the foreseeable future.

Pradeep Aggarwal, founder and chairman of Signature Global (India) Ltd, said, “The RBI decision to pause the repo rate hike is a positive development for both borrowers and real estate developers. The stable borrowing rates will be advantageous for potential homebuyers, fostering increased demand.”

He said this uptick in demand is expected to catalyse growth in the real estate sector, ultimately making a valuable contribution to the country’s GDP.

Atul Monga, CEO and co-founder of Basic Home Loan, said, “The RBI’s choice to keep repo rates the same will affect home loan interest rates in different ways. On the good side, a steady repo rate means RBI is still supporting economic recovery. This might make banks keep offering good home loan rates to boost housing demand. But, because of inflation, banks might be careful and not lower rates too much.”

He added that people looking for homes can still find affordable options, but the rates might not go down a lot. It’s a good idea for potential homebuyers to watch the market and think about refinancing to take advantage of good lending conditions and get the most financial benefits in the changing interest rate situation.

Anuj Puri, chairman of Anarock Group, said, “This is an extension of the festive bonanza that RBI gave to the homebuyers in its last policy announcement. It gives homebuyers yet another opportunity to make cost-optimised home purchases.”

He said the housing market is on a bull run and unchanged home loan rates will only add to the overall positive consumer sentiments. Additionally, given that housing prices have escalated across the top 7 cities in the last one year, at least the unchanged home loan rates will give some relief to the homebuyers.

With the repo rate remaining unchanged, the lending rate for banks remains unaffected. If the repo rate increases, banks have to pay more to borrow money from RBI. Hence, they further increase interest rates on loans.

Rajesh Saraf, managing director of Axiom Landbase Pvt Ltd, said, “The RBI’s decision promotes a robust and stable housing market, encouraging investment, fostering economic growth, and providing a safeguard against inflationary pressures.”

Raheja Developers’s Nayan Raheja said, “The RBI’s decision will boost confidence among developers and homebuyers, offering clearer long-term financial commitments and EMIs. With a positive consumer sentiment, the sector is poised to sustain its record-breaking performance.”