RBI holds repo rate: Will your home loan EMI stay the same?

The Reserve Bank of India (RBI) has once again kept the repo rate unchanged at 5.50%. The decision was made during the three-day RBI’s monetary policy committee, which started on Monday (September 29-1 October).

RBI Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC) has unanimously voted to keep the policy repo rate unchanged at 5.5%. Accordingly, the Standing Deposit Facility (SDF) rate remains at 5.25%, while the Marginal Standing Facility (MSF) rate and the bank rate stay at 5.75%. The MPC has also chosen to maintain its neutral stance.

Steady interest rates during the festive season are a welcome boost for the real estate sector, as they keep home loan EMIs predictable and support buyer confidence, especially among first-time and mid-income buyers. "This consistency encourages long-awaited purchase decisions and supports developers with better planning and execution," said Manju Yagnik, Sr. VP, NAREDCO Maharashtra. Dharmendra Raichura, VP & Head of Finance, Ashar Group, added that stable borrowing costs enable timely project delivery and continued investment, even amid global economic challenges.

The RBI reduced the key short-term lending rate (repo) by 100 basis points in three tranches beginning in February, amidst declining consumer price index (CPI) based inflation.

However, the central bank opted for a status quo in the August bi-monthly monetary policy, taking a wait-and-watch approach to assess the impact of US tariffs and other geopolitical developments on the domestic economy.

For home loan borrowers, this decision offers some immediate respite. Any increase would have resulted in higher EMIs (Equated Monthly Instalments) because the majority of home loans are now based on external benchmarks, such as the repo rate.

By holding the rate steady, the RBI has essentially ensured that existing EMIs will not go up for now.

For new borrowers, this is a good time to compare loan offers across banks and consider fixed-rate options if they are worried about future hikes.

"RBI's decision to keep the repo rate unchanged at 5.5% maintains home loan EMIs at current levels, which helps sustain buyer sentiment but does not improve housing affordability. This stability means existing home loan borrowers won't see any immediate EMI changes, while new borrowers will find loan interest rates holding steady," said Anuj Puri, chairman of ANAROCK Group.

RBI MPC: Will your home loan EMI increase or decrease?

For those with loans linked to older systems like the base rate or MCLR, now might be a good time to review your loan agreement. Shifting to a repo-linked home loan could help you benefit from better rate transparency and quicker transmission in the future.