RBI repo rate hike: What happens to your home loan EMI and FD returns if rates rise 25 bps?

The RBI repo rate is currently 5.25%, while experts cited across market coverage expect the Monetary Policy Committee could lift it by 25 basis points to 5.50%. As of Wednesday, October 7, 2026, this remains an expectation rather than an announced policy action. If the increase occurs, home loans linked to external benchmarks may become costlier, potentially raising monthly instalments or extending repayment periods, depending on lender terms. Fixed deposit rates may also rise, but the material gives no bank specific repricing schedules or return changes.

For Indian markets, a higher policy rate could pressure rate sensitive sectors by increasing borrowing costs and making deposits relatively more attractive. Listed banks, non banking financial companies and housing finance companies are exposed through the pace at which loan yields and deposit costs reset. Real estate, automobiles and consumer durables may face weaker credit demand if lenders pass on the increase. The reading would be confirmed by an MPC increase to 5.50% and subsequent rises in benchmark linked loan and fixed deposit rates. It would weaken if the MPC holds at 5.25% or transmission remains limited.