Last updated: 11 October 2026
The Reserve Bank of India raised the repo rate by 25 basis points to 5.50% on 7 October 2026. It is the first hike since February 2023. The Monetary Policy Committee voted 6–0 for the hike and changed its stance from neutral to calibrated tightening.
The stance change matters more than the 25 bps. The RBI said it means rate cuts are off the table for now. From here, the next move can only be another hike or a pause.
Several banks had already passed the hike on to repo-linked borrowers by the next morning. Below, we work out exactly how much more you’ll pay on a ₹30 lakh, ₹50 lakh and ₹1 crore home loan, and whether you should take the hit in your EMI or your tenure.
Key takeaways
- Repo rate: 5.25% → 5.50%. SDF is now 5.25% and MSF/Bank Rate 5.75%.
- On a 20-year loan, the 25 bps hike adds roughly ₹15–16 per lakh per month to your EMI. That works out to about ₹460 on ₹30 lakh, ₹770 on ₹50 lakh and ₹1,540 on ₹1 crore.
- If your bank keeps the EMI unchanged and stretches the tenure instead, a fresh 20-year loan runs about 11–12 months longer. That route costs you roughly 2.5x more in total than paying the higher EMI.
- Nomura and SBI Research expect another 25 bps hike in December. If that happens, the repo rate goes to 5.75% and the EMI increases in the tables below roughly double.
What the RBI decided on 7 October
| Item | Before | After 7 Oct 2026 |
|---|---|---|
| Repo rate | 5.25% | 5.50% |
| Standing Deposit Facility (SDF) | 5.00% | 5.25% |
| Marginal Standing Facility (MSF) / Bank Rate | 5.50% | 5.75% |
| Policy stance | Neutral | Calibrated tightening |
| MPC vote | 6–0 in favour of the hike | |
| FY27 CPI inflation forecast | 5.0% | 5.2% |
| FY27 real GDP growth forecast | 6.7% | 7.1% |
Why the RBI hiked. Governor Sanjay Malhotra said the inflation outlook is less favourable than it was a year ago. The RBI now projects CPI inflation at 4.9% in Q2, rising to 6% in Q3 and 5.7% in Q4 of FY27. That puts Q3 at the top of its 2–6% tolerance band. Elevated crude oil prices, West Asia risks and a weaker rupee were the main pressures. Retail inflation had already climbed to 4.82% in August. (We covered the September CPI print, due Monday, in our inflation preview, and the crude link in how oil prices hit India’s economy.)
Why it could hike without hurting growth too much. The RBI actually raised its FY27 GDP forecast to 7.1%, from 6.7%. A central bank that expects 7%+ growth has room to tighten.
Which banks have already raised loan rates
Lending rates linked to the repo rate (RLLR / EBLR / RBLR) move one-for-one with the repo. These banks announced revisions within hours of the policy:
| Bank | Benchmark | Old rate | New rate | Effective |
|---|---|---|---|---|
| Punjab National Bank | RLLR | 8.10% | 8.35% | 8 Oct |
| Bank of India | RBLR | 8.10% | 8.35% | 7 Oct |
| Indian Overseas Bank | RBLR | 8.10% | 8.35% | 8 Oct |
| Bank of Baroda | BRLLR | 7.90% | 8.15% | 8 Oct |
| Indian Bank | RBLR | 7.95% | 8.20% | 8 Oct |
| UCO Bank | Repo Linked Rate (Float) | 8.05% | 8.30% | 8 Oct |
| Tamilnad Mercantile Bank | RLLR | 8.25% | 8.50% | 8 Oct |
More lenders are expected to follow. Note that the benchmark rate is not your loan rate. Your bank adds a spread (credit risk premium) on top, based on your credit score and loan size. What moves by 25 bps is the benchmark, so your rate rises by the same 25 bps.
PNB, for example, left its MCLR and Base Rate unchanged. If you have an older MCLR-linked loan, the hike reaches you more slowly. It only shows up when the bank revises MCLR and your loan hits its reset date, often once a year.
How much your EMI goes up: ₹30 lakh, ₹50 lakh and ₹1 crore
All figures assume a fresh 20-year (240-month) floating-rate loan. We show two starting rates: 7.50% for a borrower with a strong credit profile, and 8.50% for a typical borrower. The “+50 bps” column shows what happens if the RBI hikes again in December, as Nomura and SBI Research expect. EMIs are rounded to the nearest rupee.
₹30 lakh home loan, 20 years
| Starting rate | EMI before hike | EMI after +25 bps | Extra per month | Extra per year | If +50 bps (Dec hike) |
|---|---|---|---|---|---|
| 7.50% → 7.75% | ₹24,168 | ₹24,628 | +₹461 | +₹5,528 | ₹25,093 (+₹925) |
| 8.50% → 8.75% | ₹26,035 | ₹26,511 | +₹477 | +₹5,719 | ₹26,992 (+₹957) |
₹50 lakh home loan, 20 years
| Starting rate | EMI before hike | EMI after +25 bps | Extra per month | Extra per year | If +50 bps (Dec hike) |
|---|---|---|---|---|---|
| 7.50% → 7.75% | ₹40,280 | ₹41,047 | +₹768 | +₹9,213 | ₹41,822 (+₹1,542) |
| 8.50% → 8.75% | ₹43,391 | ₹44,186 | +₹794 | +₹9,532 | ₹44,986 (+₹1,595) |
₹1 crore home loan, 20 years
| Starting rate | EMI before hike | EMI after +25 bps | Extra per month | Extra per year | If +50 bps (Dec hike) |
|---|---|---|---|---|---|
| 7.50% → 7.75% | ₹80,559 | ₹82,095 | +₹1,536 | +₹18,426 | ₹83,644 (+₹3,085) |
| 8.50% → 8.75% | ₹86,782 | ₹88,371 | +₹1,589 | +₹19,065 | ₹89,973 (+₹3,190) |
Quick rule of thumb: each 25 bps hike adds about ₹15–16 per month for every ₹1 lakh borrowed on a 20-year loan. Over the full 20 years, one 25 bps hike costs about ₹3,700–3,800 per lakh in extra interest. That’s ₹1.1 lakh on a ₹30 lakh loan, ₹1.84–1.91 lakh on ₹50 lakh and ₹3.7–3.8 lakh on ₹1 crore.
Higher EMI or longer tenure? The math most borrowers miss
When the rate on a floating loan rises, many banks keep your EMI the same and quietly add months to your tenure. It feels painless because nothing changes in your monthly budget. It is the more expensive option.
| Loan (20 yrs, 7.50% → 7.75%) | Option A: pay higher EMI Total extra cost | Option B: keep EMI, extend tenure Extra months | Option B Total extra cost |
|---|---|---|---|
| ₹30 lakh | ₹1.11 lakh | +11 months | ₹2.74 lakh |
| ₹50 lakh | ₹1.84 lakh | +11 months | ₹4.56 lakh |
| ₹1 crore | ₹3.69 lakh | +11 months | ₹9.12 lakh |
At 8.50% → 8.75%, the tenure extension is slightly longer, about 12 months. Option B then costs ₹3.24 lakh on ₹30 lakh, ₹5.40 lakh on ₹50 lakh and ₹10.79 lakh on ₹1 crore.
Why the gap is so big: with a longer tenure, you keep paying interest on the outstanding principal for an extra year at the end of the loan. With a higher EMI, the extra ₹15–16 per lakh goes in every month and the loan still closes on schedule.
If the RBI hikes again in December and your bank extends tenure both times, a fresh 20-year loan would stretch by about 2 years (24–27 months). On a ₹50 lakh loan at 7.50%, that adds up to nearly ₹10 lakh extra.
What to do: if your budget can absorb ₹770 a month on ₹50 lakh, ask your bank to raise the EMI instead of the tenure. Most banks will do it on request.
If you are already a few years into your loan
The impact is smaller because your outstanding balance is lower. Example: a ₹50 lakh, 20-year loan taken at 7.50% five years ago has about ₹43.45 lakh still outstanding with 15 years left.
- EMI today: ₹40,280
- New EMI at 7.75% for the remaining 15 years: ₹40,899 (+₹620 a month)
- Or keep ₹40,280 and the tenure grows by about 5 months
When will the higher EMI actually hit you?
The hike doesn’t reach your bank account on 7 October. Repo-linked loans reset on a schedule set by your lender, usually at least once a quarter. Depending on where your reset date falls, the higher rate will show up between November and early 2027. Check your loan’s reset date in your bank’s app or your loan sanction letter.
| Loan type | How fast the hike passes through |
|---|---|
| Repo-linked / EBLR floating loan (most loans since Oct 2019) | Fast. Benchmark already revised; your rate changes on the next reset, typically within a quarter |
| MCLR-linked loan | Slow. Depends on the bank revising MCLR and your annual reset date |
| Fixed-rate loan | No change during the fixed period |
What this means for FD investors and new buyers
Fixed deposits: deposit rates usually rise more slowly than lending rates. With the RBI signalling more tightening, there’s a case for keeping new FDs short (6–12 months) so you can roll over at higher rates, rather than locking in for 5 years at today’s levels.
New home buyers: higher rates also cut how much you can borrow. Banks cap your EMI as a share of income, so every hike shrinks your eligible loan amount slightly. If you’re buying around Diwali, factor in a possible second hike in December.
Prepayment: there are no prepayment charges on floating-rate home loans for individuals. In a rising-rate cycle, even small part-prepayments shrink the balance the hike applies to.
What to watch next
- 12 October (Monday): September CPI inflation data
- 21 October: MPC minutes, which show how each member voted and why. Look for signals on the size of further hikes.
- Coming days: SBI, HDFC Bank, ICICI Bank and other large lenders announcing their revisions
- December MPC meeting: a second 25 bps hike would take the repo rate to 5.75%
Frequently asked questions
What is the RBI repo rate now?
5.50%, after a 25 bps hike on 7 October 2026. It was 5.25% before.
How much will my EMI increase on a ₹50 lakh home loan?
About ₹770–795 a month on a 20-year loan, depending on your starting rate. That is roughly ₹9,200–9,500 a year.
Will my EMI go up automatically?
On a repo-linked (EBLR) floating loan, your interest rate will rise on the next reset date. Many banks keep the EMI the same and extend the tenure unless you ask them to increase the EMI.
Is it better to increase the EMI or the tenure?
Increasing the EMI is cheaper in total. On a fresh ₹50 lakh, 20-year loan at 7.50%, paying the higher EMI costs about ₹1.84 lakh extra over the loan’s life. Extending the tenure instead costs about ₹4.56 lakh.
Will the RBI cut rates soon?
Not in the near term, by the RBI’s own guidance. Under the “calibrated tightening” stance, the next move is either a hike or a pause.
Does the hike affect fixed-rate home loans?
No, not during the fixed-rate period.
Sources
- RBI Monetary Policy Statement and LAF rate circular, 7 October 2026
- Regulatory filings by PNB, Bank of India, Bank of Baroda and UCO Bank (via exchange disclosures), 7–8 October 2026
- Reports by PTI, Free Press Journal, Outlook Money and NewsBytes on the policy decision and bank rate revisions
- EMI and tenure calculations by Finquest Markets using the standard reducing-balance EMI formula
Disclaimer: This article is for information and education only and is not financial advice. EMI figures are illustrative and assume a constant rate over the loan’s life. Your actual rate depends on your lender’s spread, credit profile and reset schedule. Check with your bank before making decisions about your loan.
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