RBI MPC October 2024: Central Bank Maintains Repo Rate, Keeping Home Loan EMIs Stable

This announcement from the MPC provides crucial stability and relief for homeowners. The consistent rates reflect a positive sentiment in both the real estate and lending sectors

Vimal Nadar, Head of Research, Colliers India highlighted that while RBI has kept the benchmark lending rates unchanged at 6.5 per cent, a change in stance from “withdrawal of accommodation” to “neutral” indicates its clear direction for a possible reduction

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The Reserve Bank of India (RBI) has decided to maintain the repo rate at 6.5 per cent. This is the tenth consecutive meeting in which the rate has remained unchanged, RBI governor Shaktikanta Das announced during the Wednesday Monetary Policy Committee (MPC) review. This decision will keep home loan interest rates and equated monthly instalments (EMIs) stable for borrowers.

This announcement from the MPC provides crucial stability and relief for homeowners. The consistent rates reflect a positive sentiment in both the real estate and lending sectors, allowing lenders to increase their credit outflows to homebuyers.

“The Monetary Policy Committee (MPC), with new external members, met on 7th, 8th and 9th October, 2024. After assessing the evolving macroeconomic and financial conditions and the outlook, the MPC decided by a majority of 5 out of 6 members to keep the policy repo rate unchanged at 6.50 per cent. Consequently, the standing deposit facility (SDF) rate remains at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent. Further, the MPC decided unanimously to change the stance to ‘neutral’ and to remain unambiguously focused on a durable alignment of inflation with the target, while supporting growth,” the RBI governor said.

Commenting on the RBI’s decision on the key interest rate, Adhil Shetty, CEO of BankBazaar.com, said, “Loan holders may need to wait longer for rate cuts, possibly until December. If inflation stays under control, a rate cut may be on the cards. Until then, EMIs will remain at current levels.”

“The committee has decided to keep the repo rate unchanged at 6.5 per cent for the 10th consecutive time in a bid to control inflation. The central bank cited inflation numbers and geopolitical tensions as risks facing the economy's growth. However, in a departure from the previous few policy reviews, RBI has shifted its stance from being accommodative to neutral. Based on how the situation unfolds in the near future, this signals that the central bank is ready to go either way - if inflation stays low, we may see rate cuts in the future. However, at present, it is a wait-and-watch situation,” he added.

Vimal Nadar, Head of Research, Colliers India highlighted that while RBI has kept the benchmark lending rates unchanged at 6.5 per cent, a change in stance from “withdrawal of accommodation” to “neutral” indicates its clear direction for a possible reduction in interest rates in the foreseeable future. 

“This ongoing stability in repo rate should provide a significant thrust to residential real estate during these festive months as home loan interest rates are likely to remain steady. Typically, Q4, marked by higher inclination of homebuyers to wrap-up property purchases during the auspicious period combined with instantaneous liquidity benefit aided by developers offering attractive discounts, has historically provided the final push to housing sales across the major markets in the country. Additionally, steady borrowing costs and recent extension of Input Tax Credit (ITC) by the Supreme Court can potentially benefit property developers engaged in construction of commercial office buildings,” said Nadar.