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RBI Repo Rate Hike: Home and Car Loans Get Expensive, Higher EMI Alert for Borrowers
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News18•07-10-2026, 10:41
RBI Repo Rate Hike: Home and Car Loans Get Expensive, Higher EMI Alert for Borrowers
- •The Reserve Bank of India has hiked the repo rate by 0.25 percent after 43 consecutive months of stability.
- •Following the announcement by RBI Governor Sanjay Malhotra on October 7, the main repo rate has increased from 5.25% to 5.50%.
- •The rate hike will make borrowing expensive for banks, which will directly pass on the burden to customers through higher loan interest rates and increased EMIs.
- •Key factors behind this decision include rising international crude oil prices, rupee pressure against the dollar, and global economic challenges.
- •While existing borrowers face higher EMIs, new fixed depositors are likely to benefit from better interest rates on FDs.
Key Questions Answered
Reserve Bank Governor Sanjay Malhotra announced a 0.25% hike in the repo rate, bringing it to 5.50% from its previous level of 5.25% following the Monetary Policy Committee meeting on October 7, 2026.
Because retail loans and floating-rate home loans are directly tied to the repo rate, the 0.25% increase makes borrowing more expensive, resulting in either higher monthly EMIs or an extended loan tenure for borrowers.
Yes, the repo rate increase creates an opportunity for new fixed depositors as banks are likely to raise their FD interest rates in the upcoming period, providing better returns for new investors.
