The RBI just raised rates for the first time since 2023. Here is what it costs your home loan.
On 7 October 2026, the RBI's Monetary Policy Committee raised the repo rate by 25 basis points, from 5.25% to 5.50%. All six members voted for it. The committee also changed its stance from neutral to "calibrated tightening," which is central-bank language for: do not expect cuts soon, and more increases are possible.
It is the first increase since February 2023. If you took a home loan in the last three years, you have only ever seen your rate go down or stay put. That just changed.
What 25 basis points means in rupees
Most floating-rate home loans taken since October 2019 are linked to an external benchmark, and for most banks that benchmark is the repo rate. When the repo rate rises, your loan rate rises by the same amount at your next reset date, usually within three months.
On a 20-year loan, if your rate moves from 8.25% to 8.50%:
| Loan | EMI at 8.25% | EMI at 8.50% | Extra per month |
|---|---|---|---|
| ₹25 lakh | ₹21,302 | ₹21,696 | ₹394 |
| ₹50 lakh | ₹42,603 | ₹43,391 | ₹788 |
| ₹75 lakh | ₹63,905 | ₹65,087 | ₹1,182 |
| ₹1 crore | ₹85,207 | ₹86,782 | ₹1,576 |
Those monthly numbers look small. The trouble is that most banks do not raise your EMI. They quietly extend your tenure instead, and that is far more expensive than it looks.
The tenure trap
Take a ₹50 lakh loan with 20 years left at 8.25%. If the rate goes to 8.50% and the bank keeps your EMI at ₹42,603, you now need 13 more EMIs to clear the loan. That is more than ₹5 lakh of extra payments, spread across the end of the loan where you will not notice them until you get there.
You can check your own figures with the home loan prepayment calculator.
Three things worth doing this month
1. Find out what your bank did. Log in or call and ask two questions: what is my new rate, and did you change my EMI or my tenure? Many borrowers never find out until years later.
2. Ask to keep the original end date. If your budget can take a higher EMI, ask the bank to raise the EMI instead of extending the tenure. This is usually a simple request, and it stops the extra interest from piling up at the back of the loan.
3. Make a prepayment, even a small one. Prepaying early in a loan is the most direct way to undo a rate increase. On that same ₹50 lakh loan, a one-time payment of about ₹50,000 a year from now cancels out the extra interest from the 25 basis point increase over the life of the loan. RBI rules do not allow lenders to charge individuals a prepayment penalty on floating-rate home loans.
What happens next
The next MPC decision is due on 4 December 2026. The committee has signalled that it is watching inflation closely, and its own projections now put inflation for this year higher than before. We track every decision on the RBI repo rate page, updated the day it happens.
Rising rates have one upside: deposit rates tend to follow. If you have money parked in a savings account, this is a good moment to look at fixed deposits and the small savings schemes, several of which lock in their rate for the full term.
For education only. Not investment, tax or legal advice. See our disclaimer.