KEY TAKEAWAYS
- After the RBI raised the repo rate to 5.50% on 7 October, banks are passing on the full 0.25 percentage points. Bank of Baroda, PNB, Bank of India, Indian Bank and others raised their repo-linked lending rates within days.
- Before the hike, the lowest advertised home loan rates started at about 7.15% to 7.25% (LIC Housing Finance, Union Bank, Bank of Baroda, SBI). Expect most to start about 0.25 points higher now.
- On a ₹1 crore, 20-year loan, every 0.25 points adds about ₹1,500 a month to the EMI (my calculation).
- Your own rate depends on your credit score, loan size, and whether you are salaried. The gap between the best and worst offers is often over 1 percentage point.
- If you are paying 0.5 points or more above what new borrowers get, ask your bank for a lower spread or consider a balance transfer.
Home loans in Bangalore now typically start at about 7.4% to 8.25% at the large banks and housing finance companies, a quarter point higher than before the RBI's 7 October decision. The lowest rates still go to salaried borrowers with high credit scores. Most existing borrowers on repo-linked loans will see their rate rise by 0.25 points at their next reset.
A week after the hike, here is where rates stand, what each type of loan means for you, and how to make sure you are not paying more than you need to.
What Changed on 7 October
The RBI's Monetary Policy Committee raised the repo rate by 0.25 percentage points, from 5.25% to 5.50%, and changed its stance to "calibrated tightening". That was the first increase since February 2023, and the RBI said rate cuts are off the table for now. I covered the decision in detail in what the RBI hike means for home loans.
Most floating-rate home loans taken since October 2019 are linked to an external benchmark, usually the repo rate. Banks call this the EBLR (external benchmark lending rate) or RLLR (repo-linked lending rate). Your loan rate is that benchmark plus a fixed spread, so a repo rise reaches you in full at the next reset, typically within three months.
Banks That Have Already Raised Rates
Business Standard reported on 9 October that several lenders had raised their repo-linked lending benchmarks by the full 0.25 points:
| Bank | Before | After | Effective |
|---|---|---|---|
| Bank of Baroda | 7.90% | 8.15% | 8 Oct 2026 |
| Indian Bank | 7.95% | 8.20% | Oct 2026 |
| UCO Bank | 8.05% | 8.30% | 8 Oct 2026 |
| Punjab National Bank | 8.10% | 8.35% | 8 Oct 2026 |
| Bank of India | 8.10% | 8.35% | 7 Oct 2026 |
| Indian Overseas Bank | 8.10% | 8.35% | 8 Oct 2026 |
| Karur Vysya Bank | 8.55% | 8.80% | 8 Oct 2026 |
These are benchmarks, not the rate you pay. Banks add or subtract a spread based on your profile, and some offer home loans below the benchmark to their best borrowers.
Update, 15 October: SBI raised its EBLR and RLLR after the repo hike, effective 15 October, according to NewsBytes. Its one-year MCLR is now 8.85%. Check SBI's site for the revised home loan card rates.
Starting Rates by Lender
The table shows advertised starting rates just before the hike, from a lender comparison updated for September and October 2026, and what they are likely to be if each lender passes on the full 0.25 points (my estimate). Starting rates go only to the strongest borrowers.
| Lender | Starting rate before 7 Oct | Likely starting rate now |
|---|---|---|
| LIC Housing Finance | 7.15% | About 7.40% |
| Union Bank of India | 7.15% | About 7.40% |
| Bank of Baroda | 7.20% | About 7.45% |
| State Bank of India | 7.25% | About 7.50% |
| Punjab National Bank | 7.25% | About 7.50% |
| Bajaj Housing Finance | 7.25% | About 7.50% |
| ICICI Bank | 7.55% | About 7.80% |
| Kotak Mahindra Bank | 7.60% | About 7.85% |
| HDFC Bank | 7.75% | About 8.00% |
| Axis Bank | 8.00% | About 8.25% |
Always check the lender's own rate page on the day you apply, and ask for the rate in writing with your sanction letter.
What Your EMI Looks Like Now
For a 20-year loan, my calculation using the standard EMI formula:
| Rate | EMI on ₹1 crore | EMI on ₹2 crore | Total interest on ₹1 crore |
|---|---|---|---|
| 7.50% | ₹80,559 | ₹1,61,119 | ₹93.3 lakh |
| 7.75% | ₹82,095 | ₹1,64,190 | ₹97.0 lakh |
| 8.00% | ₹83,644 | ₹1,67,288 | ₹1.01 crore |
| 8.50% | ₹86,782 | ₹1,73,565 | ₹1.08 crore |
| 8.75% | ₹88,371 | ₹1,76,742 | ₹1.12 crore |
The difference between 7.50% and 8.50% on ₹1 crore is about ₹6,200 a month and nearly ₹15 lakh in interest over 20 years. That is why shopping around matters more than the RBI's quarter point.
Floating, Fixed and the Old MCLR Loans
- Floating (repo-linked). Most new loans. Rates move with the repo rate, up and down. With the RBI now in a tightening phase, expect your rate to stay the same or rise for the next few months.
- Fixed. A few lenders offer fixed rates, usually for the first few years only and at a premium of about 1 point or more. It rarely pays over a 20-year loan, but it can suit borrowers who need a predictable EMI.
- MCLR-linked (older loans). These reset only on your reset date, often once a year, and usually carry a higher rate. If you are still on MCLR, ask your bank about switching to the repo-linked rate.
What Decides Your Rate
- Credit score. The best rates usually go to scores of about 750 to 800 and above. Below that, expect a higher spread.
- Employment. Salaried borrowers usually get lower rates than self-employed borrowers.
- Loan amount and loan-to-value. Some lenders price larger loans and lower loan-to-value ratios better.
- Women borrowers. Several lenders offer a small concession when a woman is the primary or co-borrower.
- Relationship. Salary account holders and existing customers can often negotiate a lower spread.
When a Balance Transfer Pays
If your rate is well above what new borrowers get, first ask your bank to reduce your spread, which usually needs a small conversion fee. If it refuses, a balance transfer to another lender can pay off.
An example: with ₹80 lakh outstanding and 17 years left, moving from 8.75% to 8.00% cuts the EMI by about ₹3,600 a month, a saving of about ₹7.4 lakh over the remaining term (my calculation). Subtract processing fees, legal and valuation charges, and any stamp duty on the new mortgage before you decide. As a rough rule, a gap of 0.5 points or more with at least 10 years left is usually worth a closer look.
How to Get the Best Rate
- Check your credit report first. Fix errors and close unused cards or small loans a few months before you apply.
- Apply to lenders, not just your salary bank. Compare at least one public sector bank, one private bank and one housing finance company.
- Ask about the spread, not just the rate. The spread over the repo rate stays fixed for the life of the loan, so a lower spread keeps saving you money after every RBI move.
- Negotiate fees. Processing fees, legal and valuation charges are often reduced or waived, especially during the festive season.
- Read the reset and prepayment clauses. Floating-rate home loans for individuals carry no prepayment penalty, so you can part-prepay when you have surplus funds.
What It Means for Buyers and Borrowers
- Buying now: Get quotes from at least three lenders, including one public sector bank and one housing finance company. Negotiate the spread, processing fee and prepayment terms, not just the headline rate.
- Already borrowing: Check your reset date and current spread. Decide whether you want a higher EMI or a longer tenure, and tell your bank in writing. Raising the EMI saves a lot of interest.
- Planning a purchase: Budget for rates about 0.25 to 0.5 points higher than a few months ago. The RBI's next meeting is 2 to 4 December.
Frequently Asked Questions
What is the lowest home loan rate in October 2026?
Before the 7 October hike, the lowest starting rates were about 7.15% to 7.25%. With lenders passing on the 0.25 point repo increase, starting rates are now about 7.40% to 7.50%, for borrowers with strong credit scores.
Will my existing home loan EMI go up?
If your loan is repo-linked, your rate rises by 0.25 points at the next reset, usually within three months. Banks often extend the tenure instead of raising the EMI unless you ask them to.
Should I choose a fixed or floating rate now?
Floating rates are usually cheaper over a long loan. Fixed rates offer certainty but cost more and are often fixed for only a few years. Most borrowers stay floating.
How much does a 0.25% rise add to my EMI?
About ₹1,500 a month on a ₹1 crore, 20-year loan, or about ₹18,000 a year, based on my calculation at 7.50% to 7.75%.
Is a balance transfer worth it?
Often, if your rate is 0.5 points or more above the market and you have 10 years or more left. Compare the interest saved with the fees and charges of switching.
If you are buying in Bangalore and want help comparing loan offers, or want to know whether your current loan is costing too much, I am happy to help. You can post your requirement or message me on WhatsApp. My October policy preview explains how we got here.
Sources
- Business Standard: Major banks hike loan rates after RBI move (9 Oct 2026)
- Anika Digital: Home loan interest rates (Oct 2026) (rates as of Sep to Oct 2026, before the hike)
- NewsBytes: SBI raises EBLR and RLLR after RBI hikes repo 25 bps (15 Oct 2026)
- Reserve Bank of India: Monetary Policy Committee resolution (7 Oct 2026)
- Proptals: RBI repo decision, 7 October 2026
Last updated Oct 15, 2026. Rates change often; confirm the current rate with your lender before you act.