{"id":33675,"date":"2026-10-07T11:17:08","date_gmt":"2026-10-07T11:17:08","guid":{"rendered":"https:\/\/koshalsambada.in\/?p=33675"},"modified":"2026-10-07T11:17:08","modified_gmt":"2026-10-07T11:17:08","slug":"after-3-5-years-rbi-hikes-repo-rate-how-does-it-impact-your-emis-loan-interest-payout-explained","status":"publish","type":"post","link":"https:\/\/koshalsambada.in\/?p=33675","title":{"rendered":"After 3.5 years, RBI hikes repo rate: How does it impact your EMIs & loan interest payout? Explained"},"content":{"rendered":"


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\"After<\/div>\n<\/div>\n<\/div>\n
Does the repo rate hike mean an automatic increase in your loan EMIs?<\/span><\/div>\n<\/section>\n<\/div><\/div>\n<\/div>\n

The Reserve Bank of India<\/a> has announced a repo rate hike to keep inflation under check. But already faced with higher costs of daily essentials, Indian households have to now contend with paying higher EMIs for their loans.The US-Iran war has fed into higher costs for daily use items and the impact is visible in retail inflation numbers which are steadily rising. To keep inflation under 6%, RBI-led Monetary Policy Committee has opted for a 25 basis points repo rate hike in its review on Wednesday.<\/p>\n

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\"What<\/p>\n

Global oil price hike has led to higher inflation, which in turn has prompted RBI to hike repo rate<\/p>\n<\/div>\n<\/div>\n

But why does a hike in repo rate hit your pocket? Is it better for you to opt for an EMI hike or an extension of your loan tenor? And how does this step from RBI help people looking to invest in fixed deposits? We decode:<\/span><\/p>\n

What happens to your loan EMI and tenor?<\/h2>\n<\/p>\n

The math works like this: RBI will now lend money to banks at a higher rate. Banks will in turn charge customers higher interest rates to make up for the higher borrowing costs they face. This means loan rates will go up.<\/p>\n

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\"Home<\/p>\n

Current Home Loan Interest Rates<\/p>\n<\/div>\n<\/div>\n

So, does the repo rate hike mean an automatic increase in your loan EMIs? Only if your loan is linked to a floating rate.According to Santosh Agarwal, CEO of Paisabazaar, floating-rate home loans will become more expensive due to the increase in repo rate. Borrowers should first check the reset date of their home loans to know when the impact would come into effect.First let\u2019s understand what the impact of the 25 basis points hike is on your monthly EMIs and your total interest outgo if you decide to keep your loan tenor the same.<\/p>\n

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\"25<\/p>\n

Impact of 25 bps rate hike on Rs 40 lakh loan<\/p>\n<\/div>\n<\/div>\n

In this example shared by Bankbazaar, the increase in interest outgo is visible for loans of Rs 40 lakh, Rs 50 lakh, and Rs 60 lakh across the loan tenor. While the rise in your monthly EMIs may appear to be small, the total impact over a loan tenor is considerable.<\/p>\n

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\"25<\/p>\n

Impact of 25 bps rate hike on Rs 50 lakh loan<\/p>\n<\/div>\n<\/div>\n

For example, if you take the loan before the rate hike, your interest outgo would be Rs 4,867,894 for a Rs 40 lakh loan. But with a hike, this would rise to Rs 5,063,945, which is an increase of Rs 1.9 lakh! For a Rs 50 lakh loan, this interest payment may rise by Rs 2.45 lakh, and Rs 2.94 lakh for a Rs 60 lakh loan. The hike would be much higher if the interest rates keep rising.<\/p>\n

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\"25<\/p>\n

Impact of 25 bps rate hike on Rs 60 lakh loan<\/p>\n<\/div>\n<\/div>\n

When the repo rate rises and the bank passes it on, the borrower has two ways to absorb it: pay a higher EMI over the same tenor, or keep the EMI unchanged and repay over a longer tenor.Now let\u2019s take a scenario, where a borrower has a home loan of Rs 50 lakh, that is payable over a period of 20 years or 240 months and has a 8.5% interest rate that is linked to the repo rate. The monthly EMI works out to be around Rs 43,391. The total repayment amount over the loan\u2019s tenor (including the interest payment) works out to be around Rs 1.04 crore.Vivek Iyer, Partner and Financial Services Risk Advisory Leader, Grant Thornton explains these two scenarios with examples assuming progressive hikes in repo rates:<\/p>\n

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