RBI Repo Rate Pause: How It Impacts Your Home Loans, EMIs, And Housing Market

The Reserve Bank of India’s Monetary Policy Committee (MPC) chose to maintain the repo rate at 5.5 per cent on October 1, extending relief for borrowers who have been closely watching lending conditions during the festive season.

The decision follows cumulative cuts of 100 basis points since February, and a status quo maintained in August, ensuring that home loan equated monthly instalments (EMIs) remain steady for now.

Why the Status Quo Matters

For households, the pause means no immediate rise in borrowing costs. For the wider economy, it reflects the RBI’s attempt to strike a balance between inflation management and growth support.

Headline CPI inflation declined to an eight-year low of 1.6 per cent year-on-year in July 2025 before rising to 2.1 per cent in August, its first increase after nine months. Benign inflation conditions so far this fiscal year have been largely driven by a sharp decline in food inflation from its October 2024 peak, Governor Sanjay Malhotra explained.

Fuel inflation remained contained within a narrow range of 2.4–2.7 per cent during June–August, while core inflation held at 4.2 per cent in August, he pointed out. Excluding precious metals, core inflation was at 3.0 per cent in August. Retail inflation at 2.1 per cent, along with GDP growth of 7.4 per cent, provides a stable backdrop for lending and economic activity.

Real Estate Sector Welcomes Stability

The property market, which relies heavily on consumer sentiment and access to affordable credit, has interpreted the pause as a signal of reassurance. Developers argue that steady borrowing costs support confidence among buyers while enabling project execution without the overhang of rising interest expenses.

Ramani Sastri, Chairman and MD of Sterling Developers, said the neutral stance would help maintain the momentum in housing sales during the festive period. He added that although a rate cut could have further boosted affordability, the decision keeps the market on course for sustained growth.

Homebuyers Gain From Predictable EMIs

For homebuyers, unchanged rates mean EMIs will remain stable, preserving affordability for both existing and prospective borrowers. Sudeep Bhatt, Director Strategy at Whiteland Corporation, noted that the unchanged rate was “a strong positive” for the Delhi NCR housing market, which has been experiencing steady growth. The pause, he explained, allows developers to plan new launches without worrying about rising borrowing costs, ultimately supporting long-term housing demand.

Similarly, Rohit Kishore, CEO of Hero Realty, said the RBI’s move would encourage first-time buyers and sustain momentum in the luxury housing segment, particularly in metro cities. He stressed that policy continuity and steady credit conditions are vital for confidence in both residential and commercial property markets.

Festive Season Outlook

The decision comes as Diwali approaches, a period traditionally associated with strong home-buying activity. Raghav Malhotra of PRIME Developments emphasised that stable repo rates would fuel festive demand, especially among first-time buyers, aligning with seasonal project launches and completions.

Yashank Wason, Managing Director of Royal Green Realty, added that earlier rate cuts combined with predictable borrowing costs would continue to drive positive sentiment. “With retail inflation easing and GDP growth remaining strong, the RBI’s pause reflects confidence in India’s economic fundamentals,” he said.

While a further reduction in rates would undoubtedly have been welcomed by the market, experts say the pause still provides an environment of stability and predictability. With GST reforms easing household budgets and the festive season lifting sentiment, the housing sector looks set to continue its positive trajectory.

For home loan customers, the current stance means continued stability in EMIs, while developers gain breathing space to plan new projects. Unless unforeseen global or domestic disruptions alter the economic outlook, borrowers and the real estate industry can expect steady lending conditions in the months ahead.