In a widely expected move, the RBI-led Monetary Policy Committee (MPC) decided to maintain the repo rate at 6.5%, considering the major concerns about inflation. Notably, it is the seventh consecutive time when the central bank committee has kept the lending rate unchanged. For those who don’t know, repo rate refers to the rate at which commercial banks borrow money from the Reserve Bank of India by selling their securities to the Central Bank.
The repo rate plays a crucial role when it comes to the inflation factor in India. Apparently, RBI Governor, Shaktikanta Das, has consistently underscored the central bank’s commitment to steering inflation towards the 4 % target. Despite February witnessing a hike in the prices of food and fuel, core inflation has still exhibited a downward trend.
Unchanged Repo Rate: Big Relief For Homebuyers
From a homebuyer’s standpoint, this unchanged repo rate comes as a blessing in disguise because their equated monthly installments (EMIs) will remain stable. This provides Indian homebuyers with another opportunity to make cost-effective property purchase decisions.
With housing prices rising across the top seven cities including Delhi NCR, Mumbai, Chennai, Kolkata, Bengaluru, Pune and Hyderabad, over the last year, the unchanged home loan rates now offer some relief to people. Several realty experts also believe that RBI’s recent move will lead to a decrease in home loan interest rates, enhancing affordability in the housing market and boosting the real estate industry with an expected increase in sales.
Furthermore, given the current market conditions, the stable home loan rates are anticipated to enhance overall positive consumer sentiments in the country.
What Should Homebuyers Do?
When the central bank decides to keep the repo rate unchanged, both new and existing homebuyers can take several key steps to make the most of the situation. Here are some of the factors that you should definitely consider in such a case.
- Review Your Existing Loans
The Homeowners should check the conditions of their current mortgage and see if there is a chance to refinance at a better interest rate. It is always advisable that homeowners should get in touch with their lender to find out whether there are any advantages or choices that could arise from unchanged repo rates.
- Compare Loan Offers
If you are planning to buy a new home, it is better to thoroughly compare home loan offers from different lenders to make sure they secure the most competitive rates and favourable terms. With the repo rates remaining stable, you can negotiate better deals with banks based on their creditworthiness.
- Fixed vs Floating Rates
Prospective homebuyers must evaluate whether fixed or floating rates match their needs better. While floating rates may offer lower initial rates but are subject to market volatility, fixed rates give more stability and security against future spikes in the rates.
- Check Affordability
All the homebuyers should carefully assess their affordability when the unchanged repo rate situation arises. Moreover, in order to prevent any financial burden, they should make sure that their monthly mortgage payments are in line with their long-term financial goals and budget.
- Stay Updated
For modern homebuyers, it is important to stay informed on economic indicators and market trends that could influence future rate decisions by the central bank. By keeping themselves updated, the buyers can make timely decisions regarding their home loans.
In conclusion, by following the proactive steps, both existing and new home buyers can navigate the unchanged repo rate environment effectively and will be able to make well informed decision for themselves.