The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5 percent for the 11th consecutive time. This means that there will be no changes to home loan rates and monthly installments.
The RBI's decision is aimed at balancing inflation and growth, with Governor Shaktikanta Das emphasizing the importance of durable price stability for sustainable economic development. In addition, the RBI has reduced the cash reserve ratio (CRR) to enhance liquidity.
Since October 2019, banks have been linking floating-rate retail loans, including home loans, to external benchmarks, primarily the repo rate. As a result, any changes to the repo rate directly impact borrowers, with rate cuts providing relief and rate hikes increasing the interest burden. In this stable interest rate environment, it is recommended for borrowers to consider making strategic partial prepayments on their home loans to alleviate financial pressure.