Home Loan EMI Hike: With Diwali approaching, many people are planning major purchases such as a new home, vehicle or electronic gadgets. However, borrowers could face higher financial pressure if the Reserve Bank of India (RBI) decides to increase the repo rate at its upcoming Monetary Policy Committee (MPC) meeting.
Financial analysts and economists expect the central bank could consider a rate hike ahead of the festive season. Any increase in the repo rate could push up interest rates on loans and, in turn, increase monthly EMIs for borrowers.
RBI MPC Meeting From October 5 to 7
The RBI’s six-member Monetary Policy Committee is scheduled to meet from October 5 to October 7, 2026. The outcome of the meeting will be announced by the RBI Governor on October 7.
According to a survey of prominent economists conducted by Business Standard, eight out of 10 economists expect the RBI to raise the repo rate by 25 basis points, or 0.25 percentage points. If implemented, the repo rate could move from 5.25% to 5.50%.
Such a move would be significant as it would mark the first repo rate increase by the Reserve Bank since February 2023.
Why Could the RBI Raise the Repo Rate?
The central bank is currently facing the challenge of controlling inflation while maintaining economic growth. Retail inflation rose to 4.82% in August 2026, moving above the RBI’s 4% target for the third consecutive month.
Higher prices of vegetables, food items and energy have also put additional pressure on household budgets.
Wholesale inflation has climbed to 9.92%, while tensions in the Middle East have contributed to elevated crude oil prices. At the same time, the Indian rupee has weakened by around 6% against the US dollar so far this year.
Higher interest rates overseas could also influence the RBI’s policy considerations, particularly as the central bank seeks to support foreign investment and help maintain stability in the rupee.
How Could a Repo Rate Hike Affect EMIs?
If the RBI increases the repo rate, major banks such as SBI, HDFC and ICICI could revise their repo-linked lending rates. Borrowers with existing home loans, car loans and personal loans could subsequently face higher monthly EMIs or a longer repayment period.
People planning to take a new loan during the festive season may consider waiting until the RBI announces its policy decision on October 7. Existing borrowers can also discuss options such as fixed repayment arrangements or prepayment with their respective lenders.
Disclaimer
The information in this article is based on the facts and expectations provided in the source material. The RBI’s final policy decision and its impact on lending rates will depend on the outcome of the MPC meeting. Readers should check with their respective banks or financial institutions for the latest applicable interest rates and loan terms before making financial decisions.