Reserve Bank of India keeps repo rate unchanged. What happens to home loan EMIs

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has chosen to keep the policy repo rate unchanged, providing some relief for home loan borrowers. This decision translates to a sense of stability for borrowers who can now expect their existing monthly home loan payments to remain unchanged.

The key policy rate remains steady at 6.5 percent, with the last adjustment occurring in February, reflecting a 25 basis point hike. This decision comes against a backdrop of concerns about inflation, although there are indications of a slight easing in the economic landscape.

While the RBI’s decision to keep key rates unchanged will not translate into lower EMIs, it will provide some comfort to borrowers as they will not see any increase in monthly home loan payments. Even then, it’s noteworthy that individuals are already facing high EMIs, starting at approximately 9 percent, on their existing home loans.

Anshul Jain, Managing Director, India & Southeast Asia, and Head of APAC Tenant Representation at Cushman & Wakefield, highlighted the significance of this move from both a borrowing cost perspective for homebuyers and a financial burden standpoint for developers. The consistent rate of the cost of capital ensures that homebuyers’ EMIs do not increase, providing financial stability for both homebuyers and developers.

“From a borrowing cost perspective, the move also ensures that homebuyers’ EMIs don’t increase whereas for developers, it doesn’t increase their financial burden owing to the consistent rate of cost of capital,” he said.

Simply put, the fact that home loan EMIs will not increase offers individuals an opportunity to explore investments in low-risk financial products.

This strategic approach will allow individuals to generate income that can be utilised to offset the financial burden posed by high loan repayments.