Will RBI MPC Keep Home Loan EMIs and Interest Rates Steady?

New Delhi, Aug 6 (NationPress) The Monetary Policy Committee (MPC) of the Reserve Bank of India has opted to maintain the repo rate at 5.50 percent following its recent bi-monthly meeting. This decision implies that both the Equated Monthly Instalment (EMI) and interest obligations for home loans will remain unchanged.

In the previous meeting, the MPC had reduced the repo rate by 50 basis points, adjusting it from 6 percent to 5.50 percent.

Since February, the RBI has decreased the repo rate by a total of 100 basis points, which has prompted major banks to lower their home loan rates to as low as 7.3 percent.

Currently, home loan rates from leading financial institutions such as State Bank of India (SBI), Canara Bank, HDFC Bank, Bank of Baroda, and ICICI Bank range between 7.3 and 8 percent.

“The RBI’s choice to hold the repo rate steady at 5.5 percent, despite a decline in inflation, illustrates a cautious yet well-balanced strategy in light of global challenges and domestic stability. For the real estate sector, maintaining the current rates fosters ongoing homebuyer enthusiasm and upholds affordability in housing,” remarked Prashant Sharma, President of NAREDCO Maharashtra.

Shishir Baijal, Chairman and Managing Director of Knight Frank India, stated that this decision would protect affordability for prospective homebuyers.

“The ongoing stability in policy rates and favorable liquidity conditions provides essential predictability and helps maintain affordability for homebuyers. Notably, several banks have already lowered consumer home loan rates—a strategy that boosts housing demand, particularly in the mid and low-income sectors—with further interest rate adjustments expected,” Baijal added.

Amit Goyal, Managing Director of India Sotheby’s International Realty, expressed, “The RBI’s neutral policy stance, along with a 6.5 percent GDP growth forecast and a softer inflation outlook, reflects solid macroeconomic confidence. Strong consumption and steady urban demand are already enhancing India’s housing sentiment.”

Rajeev Radhakrishnan, CFA and Chief Investment Officer at SBI Mutual Fund, opined that the RBI's decision aligned with expectations given the prevailing geopolitical landscape.

“After the aggressive policy actions taken in June, it was anticipated that the RBI would not modify the policy rate or guidance in the August review. In an unpredictable external context characterized by trade and tariff disruptions likely to suppress external demand, the responsibility for sustaining growth primarily falls on domestic policy initiatives and the evolution of domestic demand drivers,” Radhakrishnan stated.