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 during its bi-monthly policy review.
Keeping the repo rate steady means that Equated Monthly Instalments (EMIs) and the interest burden on home loans will remain unchanged.
In its previous meeting, the MPC had cut the repo rate by 50 basis points, reducing it from 6 per cent to 5.50 per cent.
The central bank has lowered the repo rate by 100 basis points between February and June this year. As a result, major banks have reduced their home loan rates, which now start as low as 7.3 per cent.
Currently, top lenders such as State Bank of India (SBI), Canara Bank, HDFC Bank, Bank of Baroda, and ICICI Bank are offering home loan interest rates ranging between 7.3 and 8 per cent.
Commenting on the move, Prashant Sharma, President of NAREDCO Maharashtra, said, “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 ensuring domestic stability. For the real estate sector, a status quo on rates ensures continued momentum in homebuyer sentiment and sustains housing affordability.”
Shishir Baijal, Chairman and Managing Director of Knight Frank India, said the decision would help preserve affordability for homebuyers.
“The continuation of stable policy rates and surplus liquidity conditions provides much-needed predictability for the real estate sector and supports affordability for homebuyers. Some banks have already reduced consumer home loan rates – a move that bolsters housing demand, particularly in the mid- and low-income segments – and more interest rate transmission is underway,” Baijal added.
Amit Goyal, Managing Director at India Sotheby’s International Realty, stated, “The RBI’s neutral policy stance, coupled with a 6.5 per cent GDP growth outlook and a softer inflation trajectory, reflects steady macroeconomic confidence. Strong consumption and stable urban demand are already supporting India’s housing sentiment.”
Rajeev Radhakrishnan, CFA, Chief Investment Officer – Fixed Income at SBI Mutual Fund, said the RBI’s decision aligned with expectations, given the global geopolitical environment.
“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 likely to subdue external demand, the responsibility of sustaining growth lies largely on domestic policy measures and the evolution of internal demand drivers,” Radhakrishnan said.
— IANS