RBI holds repo rate at 5.25% after Budget 2026; what it means for homebuyers?

PTC Web Desk: The Reserve Bank of India (RBI) on Friday kept its key policy rate, the repo rate, unchanged at 5.25%, marking its first monetary policy decision after the Union Budget 2026. RBI Governor Sanjay Malhotra announced the decision following a three-day meeting of the Monetary Policy Committee (MPC), which meets every two months to chart the central bank’s policy direction.

The decision was largely on expected lines, supported by robust domestic growth, easing global trade pressures and improved external conditions following a trade agreement between India and the United States. Highlighting the benefits of the deal, Sanjay Malhotra said it augurs well for the Indian economy, which continues to remain one of the fastest-growing major economies globally.

The central bank also retained its ‘neutral’ policy stance, indicating that interest rates are likely to remain stable for some time as the RBI balances growth support with inflation control.

Addressing concerns around global volatility, the RBI Governor said the Indian economy is in a “good spot,” with underlying indicators pointing to growth momentum that could be sustained over a longer period.

On the inflation front, the RBI marginally revised its projections. Inflation for the first quarter of FY2026-27 (March–May 2026) has been raised to 4%, compared with the earlier estimate of 3.9%, while inflation for the subsequent quarter is projected at 4.2%.

For the current financial year ending next month, overall retail inflation has been revised upward to 2.1%, with the estimate for the ongoing quarter placed at 3.2%.

Meanwhile, real GDP growth for the current financial year has been pegged at 7.4%. For FY2026-27, growth is projected at 6.9% in Q1 and 7% in Q2, broadly in line with the Economic Survey, which forecasts growth between 6.8% and 7.2% next year.

In a significant consumer-friendly move, Malhotra announced that the RBI will propose a framework to compensate customers up to Rs 25,000 for losses arising from small-value digital transaction frauds.

He also said  draft guidelines will be issued to address concerns related to mis-selling by lenders, loan recovery practices and the use of recovery agents, signalling tighter oversight of banking and lending operations.

What the decision means for homebuyers

While many homebuyers were hoping for a rate cut, the RBI’s decision to maintain the status quo has brought stability and predictability, especially for borrowers navigating tight household budgets.

For existing home loan borrowers, the biggest relief is the absence of any immediate increase in EMIs. With no rate hike, families can continue with their current repayment plans without the fear of sudden financial pressure.

For new homebuyers, unchanged interest rates provide clarity on loan outgo over the coming months, helping them plan long-term decisions such as purchasing a first home or upgrading to a larger property.

Industry experts believe that while the move keeps sentiment steady, it may not be enough to spur fresh demand.