RBI Keeps Repo Rate Unchanged: What should home buyers do now?

financialexpress.com:

The Reserve Bank of India (RBI) on Thursday decided to maintain the status quo on the repo rate, leaving it unchanged at its current level of 6.5%. This decision, announced after the Monetary Policy Committee (MPC) meeting, comes as no surprise to many economists and market analysts who had anticipated such a move amidst the prevailing economic conditions. While this decision holds implications for various sectors of the economy, it particularly impacts the real estate market, prompting home buyers to reevaluate their strategies and decisions.

The repo rate, the rate at which the central bank lends money to commercial banks, serves as a crucial determinant of borrowing costs across the economy. Its stability or change significantly influences interest rates on loans, including home loans. With the RBI holding the repo rate steady, home loan interest rates are likely to remain unchanged in the near term, providing some reassurance to prospective home buyers.

Commenting on the same, Adhil Shetty, CEO, Bankbazaar.com, said, “Compared to the 2023 levels, home loan rates have seen a notable decrease, with rates touching as high as 9% back then. Presently, the market offers some of the lowest home loan rates around 8.30%, with many lenders clustering around 8.50% for eligible borrowers. This presents an advantageous scenario for new borrowers who can secure loans at a low spread of under 2.00% over the repo rate.”

“Existing borrowers may face continued challenges for a few more months, possibly no more than a couple of quarters, until inflation subsides enough to justify a repo rate cut. These borrowers might be subject to a higher-than-market spread, exceeding 2.00% over the repo rate. Looking back to 2021 and 2022, the