RBI MPC keeps repo rate unchanged: Home loan rates have already fallen below 8%; what should you do now?

The Reserve Bank of India (RBI) Wednesday kept the repo rate unchanged at 5.5% after the August 4-6 Monetary Policy Committee (MPC) meeting. The MPC, headed by RBI governor Sanjay Malhotra, also decided to maintain its neutral stance.

With inflation considerably below the RBI’s upper tolerance limit, a rate pause provides the central bank with breathing space to assess the full effect of the 100 basis points cut since February.

As the Federal Reserve sustains its tightening stance and global trade pressures continue, India is modifying its policies to support domestic growth.

"The RBI is exercising caution, preparing to act if external shocks, especially tariffs, begin to weigh more heavily on recovery. With no signal of imminent Fed cuts, the central bank is balancing internal stability against a weakening global backdrop," said Adhil Shetty, CEO of BankBazaar.com

"Home loan rates have already fallen below 8% for prime borrowers, particularly in refinance and balance transfer cases. Borrowers still servicing loans at significantly higher rates should consider switching to repo-linked products to reduce long-term interest costs," said Shetty.

"The housing sector has already been benefiting from the cumulative 100 bps cut in the repo rate, as reflected in the rising consumer demand driven by lower home loan interest rates," said Ramani Sastri, chairman and MD, Sterling Developers.

"As we progress into FY26, this policy pause is likely to maintain homebuyer confidence and support sustained demand in high-growth micro-markets. Combining rate stability with strong urban infrastructure momentum and growing aspirations for lifestyle-driven housing, we anticipate that this period will attract new buyers and investors alike, thereby reinforcing long-term sector resilience," said Dharmendra Raichura, VP and head of finance, Ashar Group.

On the other hand, for depositors, the pause may be a short-lived window. "FD rates have held up so far, with several tenures still offering over 7.25%. For senior citizens, who enjoy an additional 25–50 basis points, this could be the final stretch of high returns. Locking in now could help insulate savings against an eventual softening in deposit rates," added Shetty.