RBI Hikes Repo Rate to 5.50% (October 2026): How Much Will Your Home Loan EMI Go Up?
The RBI raised the repo rate by 25 basis points to 5.50% on 7 October 2026 — its first hike since February 2023. Here's what it adds to home-loan EMIs, when your bank passes it on, and your options.
By BizToolsIndia Editorial Team · Published · 4 min read
Key takeaways
- On 7 October 2026 the RBI's Monetary Policy Committee raised the repo rate from 5.25% to 5.50% and changed its stance to “calibrated tightening”.
- Repo-linked home loans rise by the same 0.25%. SBI raised its external benchmark rate to 8.15% from 15 October 2026.
- On a new ₹50 lakh, 20-year loan, a rise from 8.25% to 8.50% adds ₹788 to the EMI and about ₹1.9 lakh of interest over the loan.
- If your bank keeps the EMI unchanged and extends the tenure instead, the loan runs longer — ask which it is doing.
- Fixed deposit rates on new deposits may rise, which helps savers.
What the RBI announced
The Reserve Bank of India's Monetary Policy Committee raised the policy repo rate by 25 basis points (0.25 percentage points) to 5.50% at its meeting on 5–7 October 2026. It was the first increase since February 2023, after four cuts totalling 1.25 percentage points in 2025 and a long pause. The MPC also changed its stance from neutral to “calibrated tightening”, citing broadening inflation and high crude oil prices.
The repo rate is the rate at which the RBI lends to banks. When it rises, banks' cost of funds rises, and loans linked to the repo rate become costlier almost immediately.
Which loans go up — and when
| Loan type | What happens |
|---|---|
| Floating-rate home loans linked to repo (EBLR/RLLR) | Rate rises by 0.25%, usually from the bank's next reset date (often within 1–3 months) |
| Older MCLR-linked loans | Rise more slowly, at the next MCLR reset (often once a year) |
| Fixed-rate loans (most personal and car loans) | No change on existing loans; new loans may be priced higher |
| New loans | Priced at the new, higher rate from the date the bank revises its benchmark |
SBI, for example, raised its external benchmark lending rate to 8.15% (repo 5.50% plus a 2.65% spread) with effect from 15 October 2026. Your actual rate is the benchmark plus a credit-risk premium that depends on your credit score.
How much more you'll pay
For a new 20-year home loan whose rate rises from 8.25% to 8.50%:
| Loan amount | EMI before | EMI after | Extra per month | Extra interest over 20 years |
|---|---|---|---|---|
| ₹30 lakh | ₹25,562 | ₹26,035 | ₹473 | ₹1,13,455 |
| ₹50 lakh | ₹42,603 | ₹43,391 | ₹788 | ₹1,89,091 |
| ₹1 crore | ₹85,207 | ₹86,782 | ₹1,576 | ₹3,78,182 |
A rule of thumb: each 0.25% rise adds roughly ₹16 per lakh to a 20-year EMI. For a ₹5 lakh personal loan over 5 years, 11% to 11.25% adds about ₹62 a month.
Higher EMI or longer tenure?
When rates rise, many banks keep your EMI the same and quietly extend the tenure. On a ₹50 lakh loan just starting, keeping the ₹42,603 EMI at 8.50% would stretch a 20-year loan to 253 months — 13 extra EMIs. That's convenient month to month but costs more interest overall.
- Check your bank's letter or app to see whether your EMI or your tenure changed.
- If tenure was extended, consider asking for a higher EMI instead, or making a part-prepayment to pull the end date back. See home loan prepayment: reduce EMI or tenure?.
- Compare your spread. If your rate is well above what new customers are offered, ask your bank for a conversion to a lower spread (usually for a fee), or compare a balance transfer.
- Planning to borrow? Higher rates reduce how much you can borrow on the same salary. Check with the Loan Eligibility Calculator.
Good news for savers
Banks tend to raise fixed deposit rates after a repo hike, though more slowly than loan rates. If you're about to open an FD, comparing rates over the next few weeks may pay off. Small-savings rates are set separately by the government each quarter — see the post office interest rates for October–December 2026.
Work out your new EMI in the Loan EMI Calculator and FD returns in the FD Calculator.
Frequently asked questions
What is the current repo rate?
5.50%, after the RBI's 25 basis point hike on 7 October 2026.
Will my existing home loan EMI go up?
If it's a floating-rate loan linked to the repo rate, your rate rises by 0.25% from the next reset date. Your bank will either raise the EMI or extend the tenure.
Does the repo rate hike affect fixed-rate loans?
Not existing ones — the rate is fixed for the agreed period. New fixed-rate loans may be priced higher.
When is the next RBI policy meeting?
The MPC meets every two months; the next review is due in December 2026. Check the RBI website for the exact date.