Your home loan EMIs may not come down soon as RBI keeps repo rate unchanged

financialexpress.com:

In its latest monetary policy review, the Reserve Bank of India (RBI) maintained the repo rate at 6.5% for the eighth consecutive time on Friday, amidst a backdrop of declining inflation and robust GDP growth. The apex bank’s decision is aimed at stabilising inflation within the target range of 2-6%. However, it has some implications for home loan borrowers, both existing and new. With borrowing costs remaining high, it is crucial for borrowers to adopt new strategies to manage their home loans more efficiently.

Adhil Shetty, CEO of Bankbazaar.com, said, “For the eighth consecutive time, RBI has kept the repo rate unchanged at 6.5% in its bi-monthly interest rate decision, amid robust growth momentum. Retail inflation hit an 11-month low in April 2024 at 4.83%, remaining within the RBI’s tolerance band of 2-6%.”

“Since the repo rate directly influences lending rates, an unchanged rate means existing loans remaining benchmarked to an elevated repo rate at 6.50 with the possibility of new loans being offered with lower spreads than older loans. Any rate cut in future would lead to lower rates, hence lowering the EMIs that loan borrowers have to pay. However, the fixed interest loan will not get impacted because of this,” added Shetty.

Borrowers have several options to decrease their cost and make use of these tips to ensure the high interest rate does not hamper their financial aspirations and goals. Here are tips to help you manage your debts well.

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For the existing home loan borrowers on floating interest rates, the RBI’s decision would mean continuation of high EMIs. Higher interest rates translate to increased monthly payments, straining household