RBI MPC Meeting: What happens to your home, car loan rates after RBI keeps repo rate unchanged

RBI MPC Meeting: Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday (February 8, 2024) left the repo rate unchanged after the monetary policy committee (MPC) voted 5:1 in favour of maintaining it. With the repo rate unchanged, most likely there will be no change in your home and car loan interest rates.

Mirroring the RBI's stance on the repo rate, banks and non-banking finance companies (NBFCs) generally change or maintain the interest rates of home and car loans. But the RBI's stance on the repo rate notwithstanding, the lenders can change the interest rate subject to internal factors.

However, for the time being, it appears imminent that the lenders won't touch the home and car loans. It will be a relief to crores of borrowers who have taken home or car loans.

How does the repo rate impact home and car loans?

The repo rate is the rate of interest at which the RBI lends its money to commercial banks.

If the RBI increases the repo rate, commercial banks will pay more interest on the money they have borrowed from the central bank.

They recover that money by increasing interest rates on homes, cars, and other types of loans.

As a result, the EMI gets higher, and the borrower has to shell out more money from their pockets.

Anuj Puri, Chairman, of ANAROCK Group, said, "With the fundamentals of the Indian economy remaining strong despite all global headwinds and inflation well under control, the RBI once again decided to keep the repo rates unchanged at 6.5%, thus extending the festive bonanza that it gave to the homebuyers in its last two policy announcements. Thus, homebuyers retain the advantage of relatively affordable home loan interest rates.

"If we consider the present trends, the housing market has been unstoppable, and unchanged home loan rates will help maintain the overall positive consumer sentiments."