RBI Raises Repo Rate by 25 bps to 5.50%, First Hike Since 2023

·Falcon Properties Desk Market Update
Bangalore apartment towers under construction, symbolising real estate and home loan demand
Higher borrowing costs arrive just as the festive buying season begins.

BENGALURU — The Reserve Bank of India raised its repo rate by 25 basis points to 5.50% on 7 October 2026, its first increase since February 2023. Floating-rate home loans linked to the repo rate will see the change at their next reset. On a ₹50 lakh loan with 20 years left, a quarter-point rise adds about ₹794 a month.

Key facts

  • Decision date: 7 October 2026
  • Repo rate: raised from 5.25% to 5.50%, a rise of 25 basis points
  • Vote: unanimous among all six Monetary Policy Committee members
  • Stance: changed from neutral to calibrated tightening
  • Other rates: Standing Deposit Facility 5.25%; Marginal Standing Facility and Bank Rate 5.75%
  • Last hike before this: February 2023
  • Next MPC meeting: expected in December 2026

What the RBI decided

The Monetary Policy Committee ended a run of four consecutive holds at 5.25% and voted unanimously for the increase. Governor Sanjay Malhotra said near-term rate cuts are off the table, leaving a further hike or a pause as the likely next moves. The central bank cited rising inflation risks as the main reason, according to reports of the decision. Reports also say the RBI raised its FY27 growth forecast to 7.1% and projected inflation at 5.2%.

What changes for home loan borrowers

Floating-rate loans linked to an external benchmark such as the repo rate will reflect the increase at each lender's next scheduled reset date, so the effect will be gradual. Some lenders may keep the EMI unchanged and extend the tenure instead, which raises the total interest paid. Fixed-rate loans do not change automatically during the fixed period.

As an illustration, a ₹50 lakh loan with 20 years remaining and a rate moving from 8.50% to 8.75% sees its EMI rise from about ₹43,391 to ₹44,186, an increase of about ₹794 a month or 1.8%. These are Falcon Properties calculations, not a lender quote. Our home loan EMI guide has tables and a calculator.

Bengaluru housing context

The decision came as Bengaluru housing sales were rising. Anarock data reported this month shows about 16,670 homes sold in the city in July to September 2026, up 12% year on year, with prices up about 8%. Industry executives quoted in a Real News of India report published on 15 October broadly expect limited effects on demand, while one developer said the immediate impact would be on borrowing costs and affordability, especially for marginal buyers.

What happens next

The next Monetary Policy Committee meeting is expected in December 2026. Before the decision, some forecasters, including SBI Research and Nomura, had expected 25-basis-point hikes in both October and December. The RBI has not committed to a schedule, and the path will depend on inflation and other data.

Falcon's note: If you have a floating-rate loan, ask your lender for your benchmark, spread and next reset date, and whether it will raise your EMI or lengthen your tenure.

How this report was verified

  • Confirmed. The 7 October decision, the 5.50% rate, the unanimous vote and the stance change were reported consistently by several independent outlets.
  • Calculated by Falcon. EMI figures use the standard reducing-balance formula with the tenure unchanged.
  • Forecasts. Statements about December hikes were made before the decision and are not commitments by the RBI.

Sources

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