Repo Rate Unchanged: Is this the right time to invest and prepay your loan?
The Reserve Bank of India has kept the repo rate unchanged for the third time in a row to ensure borrowing costs do not go overboard and economic growth also continues without any disruptions. However, there is no guarantee how long the rate will remain unchanged. Borrowers and investors seem to be cautious about it.
When the repo rate does not increase, it indicates that the RBI has chosen to maintain stability in the interest rate environment.
Adhil Shetty, CEO, Bankbazaar.com, says, “The decision by the Reserve Bank of India to keep the repo rate unchanged at 6.5% can indeed create a favourable environment for investors. RBI has not increased the repo rate in its three consecutive monetary policy meetings to support economic growth and create a conducive environment for both borrowers and investors. A consistent repo rate signifies a stable interest rate environment. For investors, this stability offers predictability in borrowing costs and potential returns on investments. Investors can make informed decisions without the worry of sudden interest rate fluctuations affecting their investment strategies.”
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This decision can have implications for various aspects of the economy, including borrowing costs, investment decisions, and overall economic growth. Here’s a strategy you might consider during such a period:
Borrowers: If you have existing loans with floating interest rates, your interest costs may not rise during this period. However, it’s a good opportunity to assess your financial situation and consider prepaying higher-cost loans, if possible.
You must use this opportunity to partially prepay your loan to avoid higher interest burden if more hikes
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