The Reserve Bank of India's Monetary Policy Committee raised the repo rate by 25 basis points to 5.50% on 7 October 2026. It was the first increase since February 2023, the decision was unanimous, and the stance moved to 'calibrated tightening', according to live coverage by Upstox, Forbes India and ETV Bharat.

For anyone with a floating-rate home loan, or about to take one, the question is simple: how much more will I pay, and what should I do? This guide answers both with worked numbers.

What the RBI decided

  • Repo rate: up 0.25% to 5.50%, after four meetings at 5.25%.
  • Stance: changed to 'calibrated tightening'.
  • Outlook: Governor Sanjay Malhotra said rate cuts are off the table for now and that the next move 'can only be a rate hike or a pause'.
  • Projections for FY27: CPI inflation of 5.2% and GDP growth of 7.1%.
  • Reasons cited: elevated crude oil prices, global volatility and inflation risks from food and fuel.

Will your EMI go up?

Most floating-rate home loans from banks are linked to an external benchmark, usually the repo rate. When the repo rises, the lender raises your rate on the next reset date in your loan terms, often within one to three months. Loans linked to a bank's MCLR or a housing finance company's own lending rate also tend to move, but with a longer lag.

Fixed-rate loans don't change during the fixed period. Check your loan agreement or latest statement for the benchmark and the reset date.

A 0.25% rise, in rupees

Our own arithmetic, assuming your rate rises from 7.50% to 7.75% on the full balance, which is within the range banks quoted before the hike (SBI from 7.25%, HDFC from 7.75%, per BankBazaar, September 2026). Your exact change depends on your spread and remaining balance.

  • ₹1 crore over 20 years: EMI rises from about ₹80,560 to ₹82,100, roughly ₹1,540 a month more.
  • ₹1 crore over 25 years: about ₹73,900 to ₹75,530, roughly ₹1,630 a month more.
  • ₹1.5 crore over 20 years: about ₹1,20,840 to ₹1,23,140, roughly ₹2,300 a month more.
  • ₹1.5 crore over 25 years: about ₹1,10,850 to ₹1,13,300, roughly ₹2,450 a month more.
  • ₹2 crore over 20 years: about ₹1,61,120 to ₹1,64,190, roughly ₹3,070 a month more.
  • ₹2 crore over 25 years: about ₹1,47,800 to ₹1,51,070, roughly ₹3,270 a month more.

Higher EMI or a longer loan

Many lenders keep your EMI the same and extend the tenure instead. On the numbers above, a 20-year loan would run about 11 months longer, and a 25-year loan about 22 months longer, our arithmetic. That feels painless but costs more interest overall.

If your budget allows, ask your lender to raise the EMI rather than extend the tenure. Most banks will do this on request.

What to do now

  • Check your benchmark and reset date. Know when the change will reach you.
  • Compare your spread. If your rate is well above what new borrowers are offered, ask your bank to move you to a lower spread; a balance transfer to another lender is the alternative, after fees.
  • Prepay if you can. With the RBI signalling no cuts soon, prepaying even one extra EMI a year shortens a long loan noticeably. Floating-rate home loans to individuals carry no prepayment penalty under RBI rules.
  • Fixed or floating? A fixed rate protects you if hikes continue, but fixed rates are usually higher and often reset after a few years. Read our comparison: Fixed vs Floating Home-Loan Rate: Which to Choose
  • Buying soon? Get the sanction letter in writing and budget for a further rise, since the RBI has not ruled one out.

Does this change whether you should buy?

A 0.25% rise adds roughly ₹1,500 to ₹1,650 a month per ₹1 crore borrowed, our arithmetic. It matters, but it is usually smaller than the gap between two projects' prices, or the saving from negotiating well. Buy for the home, the location and the builder; plan the loan so a further rise would not strain you.

Planning a specific budget? Our worked example for a ₹1.5 crore flat covers eligibility and cash needed: Home Loan for a ₹1.5 Crore Flat in Bengaluru: EMI, Eligibility and Current Repo-Linked Rates