SampattiTrackYes, it can raise your EMI, but only if you have a floating-rate loan tied to the repo rate. On 7 October 2026 the RBI's Monetary Policy Committee set the policy repo rate at 5.50%. If your lender passes it on, a ₹50 lakh, 20-year home loan at 8.50% goes from an EMI of about ₹43,391 to about ₹44,186 at 8.75%, which is ₹795 more a month. Fixed-rate loans and existing FDs do not change on their own.
What the RBI changed
The Monetary Policy Committee met from 5 to 7 October 2026. The RBI's homepage now lists the policy repo rate at 5.50%, the standing deposit facility (SDF) rate at 5.25% and the marginal standing facility (MSF) rate at 5.75%. News coverage describes the decision as a 25 basis point increase, which means 0.25 percentage points. A basis point is one hundredth of a percentage point.
The repo rate is the rate at which the RBI lends short-term money to banks. You never pay it directly. It matters because it is the reference point for many of the rates you do pay and earn. When it rises, borrowing becomes costlier for banks, and that cost is passed to borrowers over time. This post sticks to what the RBI has published. The full statement is on the RBI website, and you should read it there rather than rely on a headline.
How a repo rate rise reaches your loan
Since October 2019, new floating-rate retail loans, such as home, vehicle and personal loans, from banks have been linked to an external benchmark, and for most people that benchmark is the repo rate. Your rate is the benchmark plus a fixed spread set by the lender. If the repo rate rises by 0.25 percentage points and your spread stays the same, your rate rises by 0.25 percentage points.
Three things decide when you feel it:
- The type of loan. Fixed-rate loans keep their rate for the fixed period. Older loans linked to a bank's own MCLR or base rate respond more slowly and by different amounts.
- The reset date. Each lender revises the rate at set intervals, often every three months, so the increase may reach you weeks later.
- What the lender does with it. The change can raise your EMI, or the EMI can stay the same and the tenure lengthens. RBI rules require lenders to tell you about the change and give you a choice between the two options.
The sanction letter or loan agreement states your benchmark, your spread and the reset frequency. If you cannot find it, the lender's customer service can tell you.
A worked example: ₹50 lakh home loan
Take a floating-rate home loan of ₹50,00,000 with 240 months (20 years) left. The rate is 8.50% a year. The monthly rate is 8.50 ÷ 12 = 0.7083%. The standard EMI formula gives about ₹43,391 a month. After a 0.25 percentage point increase the rate is 8.75%, and the same loan has an EMI of about ₹44,186. These figures are made up, and your own rate and balance will differ.
| Item | At 8.50% | At 8.75% |
|---|---|---|
| Monthly EMI | ₹43,391 | ₹44,186 |
| Total paid over 240 months | ₹1,04,13,840 | ₹1,06,04,640 |
| Total interest | ₹54,13,840 | ₹56,04,640 |
Check the sums: 44,186 − 43,391 = ₹795 a month, and 795 × 12 = ₹9,540 a year. Over the full 240 months the extra payment is 795 × 240 = ₹1,90,800. The interest rows match: ₹56,04,640 − ₹54,13,840 = ₹1,90,800. The total paid is the EMI times 240, and the interest is the total paid minus the ₹50,00,000 borrowed. The example assumes the new rate applies for the whole remaining term. In practice the rate will keep changing, so treat it as an estimate.
The second route is to keep paying ₹43,391 and let the tenure grow. At 8.75% that payment would take about 252 months instead of 240, which is roughly a year longer. You pay less each month but more interest in total. You can try other amounts and rates in the EMI calculator.
What about fixed deposits and savings?
A higher repo rate can eventually push deposit rates up, but banks decide this for themselves and it usually takes weeks or months. The increase is not automatic and it is not guaranteed to be the same size. Two points to remember:
- An existing fixed deposit keeps the rate it was booked at until it matures. Only new deposits and renewals see the new rate.
- Compare rates after tax. Interest on an FD is added to your income and taxed at your slab rate, so a higher headline rate helps less if you are in a higher bracket.
Debt mutual fund prices can also move when rates change, in the opposite direction to interest rates. That depends on the fund's holdings, so read the fund's documents rather than assume.
What to do this week
- List your loans. Write down each loan's balance, rate, whether it is floating or fixed, the benchmark, and the next reset date.
- Estimate the new EMI. Use the example above as a template: new rate, remaining months, current balance. You will then know the amount before the lender's notice arrives.
- Find the slack in your budget. An extra ₹795 a month is easier to absorb if you have already planned for it. Our zero-based budgeting guide shows how to move money between categories without disturbing savings.
- Decide EMI or tenure in advance. If you can afford it, prefer the higher EMI. If cash is tight, take the longer tenure now and make part-payments when you can.
- Ask about options. Lenders may allow a switch between fixed and floating or a change of spread, sometimes for a fee. Ask, and get the cost in writing before you decide.
Recording it in SampattiTrack
SampattiTrack tracks credit cards and loans as accounts in your ledger, with bill reminders. See Credit cards and bills for the steps. When your lender confirms the new EMI, update the recurring rule you use for the instalment so that future entries match. Your loan balance appears as a liability in your net worth, so you can see it fall month by month. SampattiTrack does not fetch your lender's rate or work out the new EMI for you, so take the figure from the lender's notice or the EMI calculator.
Key takeaways
- The RBI lists the policy repo rate at 5.50% after the MPC meeting of 5 to 7 October 2026.
- Only floating-rate loans linked to the repo rate change, and only at your lender's next reset date.
- On ₹50 lakh over 20 years, a 0.25 point rise adds ₹795 to the EMI, or ₹1,90,800 in interest over the full term.
- Existing FDs keep their rate; new deposit rates are set by each bank.
- Know your benchmark, spread and reset date, and decide between a higher EMI and a longer tenure before the notice arrives.
Frequently asked questions
Will my home loan EMI go up because the repo rate rose?
If your loan is floating-rate and linked to the repo rate, the rate will be revised at your lender's next reset date, and then either your EMI or your tenure changes. Fixed-rate loans do not change. Check your sanction letter for the benchmark and reset frequency.
Do FD rates rise when the repo rate rises?
Not automatically. Each bank sets its own deposit rates, and they usually move with a lag. Your existing FD keeps the rate it was booked at; only new or renewed deposits see the new rates.
Should I choose a higher EMI or a longer tenure when my rate resets?
A higher EMI clears the loan sooner and costs less interest overall. A longer tenure keeps the monthly outgo steady but adds interest. If your budget can absorb the extra amount, keeping the original tenure is usually cheaper.
Where can I check the current repo rate?
The RBI publishes the policy repo rate, SDF and MSF rates on its website, rbi.org.in, under Current Rates on the homepage, along with each Monetary Policy Statement.
This article is for educational purposes only. It is not investment, tax, legal or financial advice. Examples use made-up numbers, and past returns do not predict future results.