The RBI raised the repo rate from 5.25% to 5.50% on 7 October 2026. Our news update on the hike covers the decision. This guide is the practical follow-up: when your own home loan or loan against property will change, by how much, and what you can do about it.
Banks have already moved their benchmarks
Most banks passed on the full 0.25 points within days. As reported:
| Bank | Benchmark | Before | After | From |
|---|---|---|---|---|
| Punjab National Bank | Repo-linked lending rate | 8.10% | 8.35% | 8 October 2026 |
| Bank of Baroda | Repo-based lending rate | 7.90% | 8.15% | October 2026 |
| Indian Bank | Repo-linked benchmark rate | 7.95% | 8.20% | 8 October 2026 |
| SBI | EBLR (before CRP and BSP) | 7.90% | 8.15% | 15 October 2026 |
SBI also raised its one-year MCLR from 8.70% to 8.85% from 15 October 2026, a smaller rise than the repo hike.
A higher benchmark does not mean your EMI has already changed. That happens at your loan's reset.
When does your loan actually reprice?
Repo-linked (EBLR) loans. Banks must link floating-rate home loans to an external benchmark and reset the rate at least once every three months. Some banks reset on the date the benchmark changes; others use fixed quarterly reset dates. Your sanction letter or loan agreement says which. If your reset falls in November or December, the higher rate starts then.
MCLR loans. Older loans may still be on MCLR. The reset period matches the MCLR tenor the loan is linked to, and can be one year at most. A loan linked to the one-year MCLR changes only on its annual reset date, and then by however much the bank's MCLR has moved by that date. MCLR usually moves more slowly than the repo rate, in both directions.
NBFC and housing finance company loans. These lenders are not bound by the banks' external-benchmark rule. Their floating rates follow the lender's own reference rate, as set out in your loan agreement. Check your latest statement or ask the lender in writing when your rate will change.
Your spread does not change because of the hike. Your rate is the benchmark plus a spread. The credit-risk part of the spread can change only if your credit assessment changes substantially, and the other parts once in three years.
EMI or tenure: your choice, if you make it
Under RBI's EMI-reset framework, your lender must tell you about any increase in EMI or tenure, and give you the choice of a higher EMI, a longer tenure, or a mix of both, plus the option to prepay in part or full at any time. A longer tenure must not lead to negative amortisation, where the EMI no longer covers the interest. If you don't choose, the lender applies its default option, so ask which one that is.
Using the same illustration as our news update: ₹50 lakh with 20 years left, moving from 8.50% to 8.75%.
| Option | EMI | Tenure | Total interest |
|---|---|---|---|
| Before the hike (8.50%) | ₹43,391 | 240 months | ₹54.14 lakh |
| Pay a higher EMI | ₹44,186 | 240 months | ₹56.05 lakh |
| Keep the EMI, longer tenure | ₹43,391 | about 252 months | about ₹59.53 lakh |
| Part-prepay about ₹90,000 now | ₹43,391 | 240 months | about ₹55.04 lakh |
Two things stand out:
- A small prepayment neutralises the hike. In this example, paying down about ₹90,000 now keeps both your EMI and your tenure unchanged.
- Stretching the tenure is the costliest option. It feels painless, but the extra months come at the end of the loan, when you would otherwise have been debt-free.
If you have a larger surplus, the effect is bigger. Prepaying ₹2 lakh and paying the new EMI of ₹44,186 would close this loan in about 217 months, 23 months early, with total interest of about ₹47.53 lakh instead of ₹56.05 lakh (illustrative; your lender's daily-balance calculation will differ slightly).
Prepaying costs nothing on most home loans
Banks and other regulated lenders cannot charge pre-payment fees on floating-rate loans to individuals for non-business purposes; for all regulated lenders this applies to loans sanctioned or renewed from 1 January 2026. For older NBFC or HFC loans, and for business-purpose loans, check your sanction letter, because the rules for those depend on the lender type and loan size.
Ask for a lower spread before you refinance
A rate rise is a good time to check whether your spread is still competitive. You have three routes, from cheapest to most work:
- Ask your bank to cut the spread. RBI lets banks reduce spread components earlier than three years to retain customers. Some lenders charge a conversion fee for this. HDFC Bank's conversion-fee page, as listed on 21 October 2026, shows 0.25% of the principal outstanding or ₹5,000, whichever is lower, plus taxes, for a fully disbursed home loan. On our ₹50 lakh example, a spread cut of 0.25 points brings the rate back to 8.50% and saves about ₹795 a month, or about ₹1.91 lakh over 20 years.
- Move from MCLR to the repo-linked benchmark. If you can prepay without charges, your bank must allow the switch without fees other than reasonable administrative or legal costs, at the rate a new borrower of the same category would get. The switch is not treated as a foreclosure. Compare carefully: a repo-linked rate passes on hikes faster, but also cuts.
- Refinance with another lender. A balance transfer pays when the interest saved clearly exceeds the switching costs. Use our balance transfer calculator and read when a balance transfer pays. Festive campaigns are waiving some fees right now; our guide to festive home loan and LAP offers explains which waivers are worth having.
Prepay, refinance or switch: a quick guide
| Your situation | Usually the best move |
|---|---|
| Spare cash, competitive spread | Part-prepay and keep the tenure |
| No spare cash, spread higher than new borrowers get | Ask your bank for a spread cut first |
| Still on MCLR or base rate | Compare the repo-linked rate and ask to switch |
| Bank won't reprice and the gap is wide, with many years left | Balance transfer, after costs |
| Only a few years left | Prepay; switching rarely pays |
What to do this month
- Find your benchmark, spread and next reset date on your sanction letter or latest statement.
- Tell your lender in writing whether you want a higher EMI or a longer tenure.
- Prepay if you have surplus funds, even a modest amount.
- Ask for a lower spread and get the conversion fee in writing.
- Compare a transfer only after your bank has answered.
How Biz Corp Solutions helps
We review your home loan or LAP statement, work out what the reset means for you, and compare your spread with what banks, NBFCs and housing finance companies are offering, whether that leads to a spread cut, a switch to the repo-linked benchmark or a balance transfer. The lender decides the final rate. See our home loan and loan against property services, or call us to review your loan.
This article is based on RBI directions and the RBI's policy announcement of 7 October 2026, and on bank rate revisions reported up to 21 October 2026. Figures are illustrative. Your rate, reset date and options are set by your lender and your loan agreement.