Home loan borrowers with loans linked to the repo rate received temporary relief on Wednesday as the central bank decided to maintain the repo rate at 5.25% after the conclusion of its three-day Monetary Policy Committee meeting. The decision means that interest rates on floating-rate home loans linked to external benchmarks are likely to remain unchanged for the time being, allowing borrowers to continue servicing their loans at existing EMI levels. However, experts caution that the relief may be short-lived, as interest rates could rise in future policy reviews if inflationary pressures persist. The repo rate is the rate at which banks borrow funds from the central bank. Changes in the repo rate directly influence lending rates across the banking system. When the repo rate is cut, banks’ borrowing costs fall, enabling them to pass on the benefit to customers through lower loan interest rates. Conversely, an increase in the repo rate usually leads to higher borrowing costs and increased EMIs for borrowers. Most new floating-rate home loans are linked to the repo rate or other external benchmarks, making them the quickest to reflect changes in monetary policy. Loans linked to the Marginal Cost of Funds-based Lending Rate (MCLR), on the other hand, experience a slower transmission of rate changes, with adjustments taking place over a longer period. Fixed-rate home loans remain unaffected by repo rate movements. With the repo rate unchanged, banks are expected to maintain the status quo on lending rates, as the impact of previous policy actions has already been fully absorbed by the system. Borrowers looking to reduce their interest burden may explore refinancing options. Refinancing involves transferring the outstanding loan to another lender offering a lower interest rate, subject to eligibility criteria such as a strong credit score and a consistent repayment record. While the current policy stance provides short-term comfort to home loan borrowers, future rate movements will depend on inflation trends and broader economic conditions, making upcoming policy meetings crucial for borrowers with floating-rate loans.