RBI raises the repo rate to 5.50%: what it means for your loan EMI
The RBI raised the repo rate by 0.25% on 7 October 2026. Which loans change and when, what it adds to an EMI, and why a longer tenure costs more.
On 7 October 2026 the Reserve Bank of India raised the repo rate by 0.25 percentage points, from 5.25% to 5.50%. It's the first increase since February 2023. If you have a floating-rate home loan, your EMI or your tenure is likely to go up within the next three months. If your loan is on a fixed rate, nothing changes. Here's how to tell which you have, what the increase costs in rupees, and the one choice worth making carefully.
What the RBI decided
The decision was made by the RBI's Monetary Policy Committee, the six-member panel that sets the repo rate, at its meeting from 5 to 7 October. It isn't a government decision, though it's often reported as one. All six members voted for the increase. The committee also changed its stance to "calibrated tightening", and gave inflation as the reason: it expects consumer price inflation to rise to about 6% in October to December.
| Rate | Before | From 7 October 2026 |
|---|---|---|
| Repo rate | 5.25% | 5.50% |
| Standing deposit facility rate | 5.00% | 5.25% |
| Marginal standing facility rate and Bank Rate | 5.50% | 5.75% |
The committee meets next from 2 to 4 December 2026.
Does it change your loan?
The repo rate is what banks pay to borrow from the RBI overnight. Your loan follows it only if your interest rate is floating, meaning it's tied to a benchmark.
- Floating, linked to the repo rate. Your loan papers may call it RLLR or EBLR. Since October 2019, banks have had to link new floating-rate loans to individuals to an outside benchmark, and most chose the repo rate. They must reset the rate at least once every three months, so the increase reaches you on your loan's next reset date, not on 7 October.
- Floating, linked to MCLR, a base rate, or the lender's own reference rate. Older bank loans, and many loans from housing finance companies and NBFCs. These move on the lender's own timetable, and not always by the full 0.25%.
- Fixed rate. Most personal loans and many car loans. The rate is set for the life of the loan, so the hike doesn't touch it.
- Credit cards aren't linked to the repo rate.
Not sure which you have? Your sanction letter names the rate type and the benchmark, and so does the annual interest certificate your lender sends for tax.
What 0.25% costs, in rupees
On a repo-linked loan the full change is usually passed on, so a rate of 8.00% becomes 8.25%. Here's what that does to the EMI on a few floating-rate loans.
| Loan outstanding | Time left | EMI before | EMI after | Extra each month |
|---|---|---|---|---|
| ₹30 lakh home loan, 8.00% → 8.25% | 20 years | ₹25,093 | ₹25,562 | ₹469 |
| ₹50 lakh home loan, 8.00% → 8.25% | 20 years | ₹41,822 | ₹42,603 | ₹781 |
| ₹5 lakh personal loan on a floating rate, 12.00% → 12.25% | 5 years | ₹11,122 | ₹11,185 | ₹63 |
The rates are examples, not any lender's offer. Put in your own balance, rate and remaining tenure in the home loan EMI calculator to see your figure.
Higher EMI or longer tenure: the choice that matters
When the rate goes up, a lender can raise your EMI, or keep the EMI the same and add months to the end of the loan. Extending the tenure is the quieter option, because the amount leaving your account each month doesn't change. On a long loan it's also the more expensive one.
Take the ₹30 lakh home loan above:
| Option | Monthly payment | Loan ends | Extra interest over the loan |
|---|---|---|---|
| Pay the higher EMI | ₹25,562 | On time | About ₹1.1 lakh |
| Keep the EMI, extend the tenure | ₹25,093 | About 12 months later | About ₹3 lakh |
A quarter of a percent adds almost a year, because at the higher rate less of each early EMI goes towards the principal. On a short loan the gap is small: the ₹5 lakh personal loan above would run less than a month longer.
What your lender has to tell you, and what you can ask for
For floating-rate EMI loans to individuals, RBI rules say that when the rate is reset, the lender must:
- tell you how the change affects your EMI or your tenure;
- let you choose a higher EMI, a longer tenure, or a mix of the two;
- let you prepay part or all of the loan at any time;
- offer you the option to switch to a fixed rate under its own policy, and tell you what switching costs.
Banks and NBFCs also can't charge a prepayment or foreclosure fee on a floating-rate loan an individual took for a purpose other than business. That's set out in the RBI's Pre-payment Charges on Loans Directions, 2025 for loans sanctioned or renewed from 1 January 2026, and earlier RBI rules already said the same for older loans of this kind. So paying down part of a home loan to keep your EMI where it was costs nothing in fees. The loan foreclosure calculator shows what a part-payment saves.
Switching to a fixed rate isn't automatically better. A fixed rate is usually higher than the floating rate on the day you switch, and if rates come back down you won't get the cut. Ask your lender for the fixed rate, the switching fee and how many times you can switch, then compare.
If you're about to take a loan
Lenders tend to reprice new loans soon after a repo change, so a floating-rate quote from September may not hold. A personal loan is usually fixed: the rate you sign at is the rate you keep.
A higher rate also lowers how much you can borrow, because the same share of your salary now covers a smaller loan. How much personal loan you can get on your salary shows how that sum works. Checking your eligibility on CrediVitt doesn't read your credit report, so you can see what each lender on the platform is likely to offer before you apply. Why that matters for your CIBIL score.
The short version
- The repo rate is now 5.50%, up 0.25% from 7 October 2026. The RBI's Monetary Policy Committee decided it, not the government.
- Repo-linked floating loans change at their next reset, within three months. Fixed-rate loans don't change.
- On a ₹30 lakh, 20-year home loan at 8%, that's about ₹469 more a month, or about a year longer.
- If you can afford it, take the higher EMI rather than the longer tenure, or prepay part of the loan. Floating-rate loans to individuals carry no prepayment fee.