In short: On 7 October 2026 the Reserve Bank of India raised the repo rate by 0.25% (25 basis points) to 5.50%, its first increase after the 1.25% of cuts made in 2025. It also changed its policy stance from neutral to calibrated tightening, which signals that rate cuts are off the table for now. If your home loan is repo-linked, your rate will rise by 0.25% at its next reset: about ₹767 a month on a ₹50 lakh, 20-year loan at 7.50%. The bigger question is whether you let the bank stretch your tenure instead, because that quietly costs more than twice as much.
What the RBI Decided on 7 October 2026
The six-member Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, met from 5 to 7 October 2026 and voted unanimously for the hike. The key numbers from the RBI Monetary Policy Statement:
| Rate | Before (August 2026) | Now (7 October 2026) |
|---|---|---|
| Policy repo rate | 5.25% | 5.50% |
| Standing Deposit Facility (SDF) | 5.00% | 5.25% |
| Marginal Standing Facility (MSF) and Bank Rate | 5.50% | 5.75% |
| Stance | Neutral | Calibrated tightening |
The repo rate is the rate at which the RBI lends to banks. Since October 2019, most new floating-rate home loans from banks are linked directly to it through an external benchmark (the EBLR or RLLR), so a change in the repo rate flows into your loan rate almost one for one.
Why the RBI Raised Rates
The RBI held the repo rate at 5.25% through its June and August 2026 reviews. Three things changed its mind, according to the policy statement:
- Inflation is rising. CPI inflation increased to 4.8% in August 2026 from 4.5% in July. The RBI now projects inflation at 5.2% for 2026-27, peaking at 6.0% in the October to December quarter, above its 4% target.
- Oil and geopolitics. The statement cites “the re-escalation of the conflict in West Asia and the consequent sharp volatility in crude oil prices.”
- A weak monsoon. “Deficient south-west monsoon and strong El Niño conditions pose risks to agriculture sector’s outlook,” which tends to push up food prices.
Growth is still solid, which gives the RBI room to tighten: it projects real GDP growth of 7.1% for 2026-27.
How Much Your EMI Goes Up
The table assumes a repo-linked loan whose rate moves from 7.50% to 7.75% (the full 0.25% hike), with 20 years remaining and the lender raising the EMI rather than the tenure.
| Loan amount | EMI at 7.50% | EMI at 7.75% | Extra per month | Extra over 20 years |
|---|---|---|---|---|
| ₹30 lakh | ₹24,168 | ₹24,628 | ₹460 | ₹1,10,400 |
| ₹50 lakh | ₹40,280 | ₹41,047 | ₹767 | ₹1,84,080 |
| ₹75 lakh | ₹60,419 | ₹61,571 | ₹1,152 | ₹2,76,480 |
| ₹1 crore | ₹80,559 | ₹82,095 | ₹1,536 | ₹3,68,640 |
If you are a few years into your loan, the impact is smaller because the outstanding balance and remaining tenure are lower: on ₹40 lakh outstanding with 15 years left, the EMI rises by about ₹571. Run your own numbers on our free EMI calculator.
When Your Bank Will Pass It On
How fast the hike reaches you depends on what your loan is linked to:
- Repo-linked (EBLR/RLLR) loans: the rate changes at the reset date in your loan agreement, typically monthly or quarterly. Some banks moved within a day: Bank of Baroda revised its repo-linked lending rate to 8.15% from 8 October 2026, and HDFC Bank’s published home loan range now reads repo rate plus 2.50% to 7.95%, or 8.00% to 13.45%.
- MCLR-linked loans: the rate changes only at your annual or half-yearly reset, and only as far as the bank’s MCLR has moved by then. The hike reaches you later, and sometimes partly.
- Housing finance companies and NBFCs: their rates are not tied to the repo rate by rule. They usually follow the market, but on their own timing; check the notice your lender sends.
Not every bank had updated its published rate card by 10 October 2026 (Canara Bank, SBI and Kotak still showed their earlier starting rates). See our current lender rate comparison, which we re-check against each lender’s own page.
Higher EMI or Longer Tenure? The Choice That Matters Most
When rates rise, many lenders keep your EMI the same and extend the loan tenure by default. It feels painless, but it costs more. On a fresh ₹50 lakh, 20-year loan:
| Option | Monthly EMI | Tenure | Extra cost of the hike |
|---|---|---|---|
| Pay the higher EMI | ₹41,047 | 20 years | ≈ ₹1.8 lakh |
| Keep the EMI, extend the tenure | ₹40,280 | about 21 years (11 extra months) | ≈ ₹4.6 lakh |
If your budget can absorb the higher EMI, ask your lender in writing to increase the EMI rather than the tenure. If it cannot, accept the extension for now and make small part-prepayments when you can: under the RBI’s pre-payment rules, floating-rate home loans to individuals carry no prepayment charge, so every extra rupee you pay goes straight to principal.
If You Are Buying a Home Now
Starting rates at the cheapest lenders are still close to 7.15% to 7.45% for the strongest profiles, but they are now more likely to move up than down. Three practical points:
- Lock the sanction, not the rate. A floating-rate sanction letter does not freeze your rate; the spread over the repo rate is what stays fixed. Negotiate the spread, because that is the part that lasts for the life of the loan.
- Keep a buffer in your EMI budget. Plan for one or two more 0.25% moves. On a ₹50 lakh loan, each one adds roughly ₹770 to ₹780 a month.
- Your credit score matters more now. Lenders reserve their floor spreads for 750-plus scores. Check yours free before you apply.
What to Do This Month
- Find your benchmark. Check your sanction letter or latest statement: is your loan repo-linked, MCLR-linked, or with an HFC?
- Watch for the reset notice. When it arrives, check whether the lender has raised your EMI or your tenure, and ask for the option that suits you.
- Compare your spread. If you are paying 0.4% or more above what new borrowers with your profile are offered, ask your lender for a spread reset or consider a balance transfer.
- Prepay if you have surplus cash. With no prepayment charge on floating-rate home loans, a part-prepayment now offsets the hike directly.
Frequently Asked Questions
What is the RBI repo rate in October 2026?
The repo rate is 5.50%. On 7 October 2026 the RBI Monetary Policy Committee voted unanimously to raise it by 25 basis points from 5.25%. The standing deposit facility rate is now 5.25%, and the marginal standing facility rate and Bank Rate are 5.75%.
How much will my home loan EMI increase after the October 2026 repo rate hike?
For a repo-linked floating loan, the rate rises by 0.25%. On a 20-year loan at 7.50% that becomes 7.75%, the EMI rises by about ₹460 a month per ₹30 lakh borrowed, about ₹767 on ₹50 lakh and about ₹1,536 on ₹1 crore.
When will my bank increase my home loan rate?
Repo-linked (EBLR or RLLR) loans reset on the schedule in your loan agreement, usually monthly or quarterly. Some banks revised their repo-linked lending rate within a day of the decision; for example, Bank of Baroda revised its BRLLR to 8.15% from 8 October 2026. MCLR-linked loans move more slowly, at their annual or half-yearly reset date.
Is it better to pay a higher EMI or extend the loan tenure?
Paying the higher EMI is usually cheaper. On a fresh ₹50 lakh, 20-year loan, the 0.25% hike costs about ₹1.8 lakh extra over the full tenure if you pay the higher EMI, but about ₹4.6 lakh extra if the bank keeps your EMI the same and extends the tenure by roughly 11 months. Ask your lender to raise the EMI if your budget allows.
Will the RBI raise rates again in 2026?
The RBI changed its stance to calibrated tightening, which it says means rate cuts are off the table in the near term and the next move could be a hike or a pause, depending on inflation and growth. The next policy meeting is on 2 to 4 December 2026.
Should I switch to a fixed rate home loan now?
Not automatically. Fixed rates in India usually carry a significant premium over floating rates, and a 0.25% hike does not change that maths on its own. Compare the fixed rate against your current floating rate plus one or two possible further hikes before deciding, and check the reset terms of any hybrid product.
RBI press release: Monetary Policy Statement, 7 October 2026 · RBI Monetary Policy Statement (PDF) · Bank of Baroda retail loan rates · HDFC Bank home loan rates
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Finvastra is a financial advisory firm based in Hyderabad, Telangana. We advise individuals and businesses on home loans, business loans, loan against property, MSME financing, wealth management, and insurance, working as the client's representative, not as an agent of any lender. We have facilitated over ₹2,000 crore in financing across Hyderabad and Telangana.