# Repo Rate Hike to 5.50%: Impact on Your Home Loan EMI > RBI raised the repo rate to 5.50% on 7 Oct 2026. What the hike does to your home loan EMI, worked examples, and whether to raise EMI or extend tenure. - **Published**: 2026-10-18 - **Modified**: 2026-10-18 - **Category**: loans - **URL**: https://www.tldr.money/articles/loans/repo-rate-hike-home-loan-emi --- Start with the [loans guide](/loans) if you are new to how loan rates work. This page covers one question: the **repo rate hike impact on home loan EMI** after the Reserve Bank of India (RBI) raised rates on 7 October 2026. ## What RBI announced on 7 October 2026 The Monetary Policy Committee (MPC) met from 5 to 7 October and voted unanimously to raise the policy repo rate by 25 basis points (bps), from 5.25% to 5.50%. The change took effect immediately. | Rate | New level | |---|---| | Policy repo rate | 5.50% | | Standing deposit facility (SDF) | 5.25% | | Marginal standing facility (MSF) and Bank Rate | 5.75% | RBI also changed its stance to "calibrated tightening" and said rate cuts are "off the table in the near term": the next move can only be a hike or a pause. It now projects CPI inflation of 5.2% for 2026-27 (6.0% in the October-December quarter) and GDP growth of 7.1%. The minutes are due on 21 October and the next MPC meeting is on 2 to 4 December 2026. This is the first hike after an easing cycle that took the repo rate down 125 bps from 6.50% to 5.25% by December 2025. ## Which banks have raised loan rates Banks with repo-linked lending rates (RLLR) moved within a day, as reported by CNBC-TV18 on 7 October: | Bank | Old RLLR | New RLLR | Effective | |---|---|---|---| | Bank of Baroda | 7.90% | 8.15% | 8 Oct | | Bank of India | 8.10% | 8.35% | 7 Oct | | Indian Bank | 7.95% | 8.20% | 8 Oct | | Indian Overseas Bank | 8.10% | 8.35% | 8 Oct | | Punjab National Bank | 8.10% | 8.35% | 8 Oct | | Karur Vysya Bank | 8.55% | 8.80% | 8 Oct | | Tamilnad Mercantile Bank | 8.25% | 8.50% | 8 Oct | The RLLR is the bank's benchmark, not your loan rate. Your rate is the RLLR plus a spread fixed in your loan agreement, so the 25 bps flows straight through to you. ### EBLR vs MCLR: why some loans move faster Since October 2019, RBI has required new floating-rate retail loans from banks to be linked to an external benchmark such as the repo rate, with the rate reset at least once every three months. These external benchmark lending rate (EBLR) loans feel a repo change quickly. Older loans on the MCLR or base rate move more slowly, because those benchmarks follow the bank's own funding costs. ## Repo rate hike impact on home loan EMI: the numbers We worked out the EMI for a fresh 25-year loan whose rate moves from 7.50% to 7.75%. Our figures match the BankBazaar estimates reported by Mint on 7 October. | Loan amount | EMI at 7.50% | EMI at 7.75% | Extra per month | |---|---|---|---| | INR 30 lakh | INR 22,170 | INR 22,660 | INR 490 | | INR 40 lakh | INR 29,560 | INR 30,213 | INR 654 | | INR 50 lakh | INR 36,950 | INR 37,766 | INR 817 | If you are some years into your loan, the increase is smaller, because your outstanding balance and remaining tenure are smaller. Your lender must tell you about the change straight away and send a quarterly statement showing EMIs paid and left. ## Higher EMI or longer tenure? RBI requires lenders to give borrowers of EMI-based floating-rate loans a choice: raise the EMI, extend the tenure, or do a mix of both. You can also prepay part or all of the loan. On the INR 50 lakh example, here is what each option costs over the life of the loan: | Option | Monthly EMI | Tenure | Total interest | |---|---|---|---| | Before the hike (7.50%) | INR 36,950 | 300 months | INR 60.85 lakh | | Pay the higher EMI (7.75%) | INR 37,766 | 300 months | INR 63.30 lakh | | Keep the old EMI (7.75%) | INR 36,950 | about 322 months | INR 68.87 lakh | Keeping the EMI feels painless, but it adds about 22 months of payments and roughly INR 8 lakh of interest, more than three times the INR 2.4 lakh extra cost of simply paying INR 817 more a month. RBI brought in its reset rules after complaints that lenders stretched tenures without clearly asking borrowers, so check what yours did. ## Should you prepay now? Prepaying cuts interest at your loan rate, which is now higher. For floating-rate loans taken by individuals for non-business purposes, RBI's pre-payment charges directions bar lenders from charging a prepayment penalty on loans sanctioned or renewed from 1 January 2026; check your sanction letter for older loans. Before you prepay: 1. **Clear expensive debt first.** Credit card interest is not linked to the repo rate and is far costlier. See [credit card fees and the minimum-due trap](/articles/credit-cards/credit-card-fees-and-minimum-due-trap). 2. **Keep an emergency fund.** Money sent to the loan is hard to get back. 3. **Compare with safe returns.** If you would otherwise hold the money in deposits, compare against [the best FD rates after the hike](/articles/banking/best-fd-rates-senior-citizens) and [small savings rates for October-December 2026](/articles/tax-planning/small-savings-interest-rates-oct-dec-2026). ## What the hike means for savers Higher rates help depositors. Bajaj Finance raised FD rates by 15-40 bps from 7 October, taking its 31-60 month rate to 7.75% from 7.40%, and several small finance banks now offer senior citizens up to 8.50%. Remember that deposits with an NBFC such as Bajaj Finance are not covered by DICGC deposit insurance. To see how a higher EMI fits your monthly budget, run your numbers through the [in-hand salary calculator](/tools/in-hand-salary-calculator). ## Sources - RBI, Monetary Policy Statement 2026-27, press release, 7 Oct 2026: https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=63742 - RBI, External benchmark based lending, circular dated 4 Sep 2019: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11677 - RBI, Reset of floating interest rate on EMI-based personal loans (updated 1 Oct 2025): https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12529 - RBI, Pre-payment Charges on Loans Directions, 2025: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12878 - CNBC-TV18, banks raise loan rates after the repo hike, 7 Oct 2026: https://www.cnbctv18.com/personal-finance/more-banks-raise-loan-rates-as-rbi-repo-hike-filters-through-20007001.htm - The Hindu, background on the 2025 easing cycle, Oct 2026 - Mint and BankBazaar EMI estimates, 7 Oct 2026; Bajaj Finance FD revision via CNBC-TV18, 7 Oct 2026 - EMI and interest figures: tldr.money calculation using the standard reducing-balance EMI formula --- - [More loans articles](https://www.tldr.money/articles/category/loans) - [All articles](https://www.tldr.money/articles)