Why did the RBI do this?

Prices are going up again. Inflation was 4.5% in July and 4.8% in August, and the RBI expects it to be around 5.2% this year. Oil is expensive, and the rupee has slipped, so anything we import costs more.

Raising rates is the RBI’s usual answer to this. It makes borrowing a bit more expensive, people spend a little less, and prices slow down. The Monetary Policy Committee, led by Governor Sanjay Malhotra, voted for it unanimously.

The RBI has also said rate cuts are off the table for now. So if you were hoping your EMI would come down next year, I wouldn’t count on it.

What is the repo rate?

It’s the rate at which the RBI lends money to banks for short periods. When banks have to pay more to borrow, they charge more when they lend. That’s really all there is to it.

How does it affect my home loan?

Since October 2019, most new floating-rate housing loans have been linked to the repo rate. When it goes up, your loan rate goes up too. Banks usually reset these loans at least once every three months, so you could see the change pretty soon.

If you have an older loan linked to MCLR, it’ll take longer. The new rate kicks in on your reset date, which for most people is every six months or once a year. And if you’re on a fixed rate, you don’t need to worry about this until your fixed period ends.

Some developers think banks may wait until after Diwali to pass on the hike, since it’s a big buying season. Maybe. But I’d plan as if it’s coming anyway.

How much more will I pay?

Say you have a ₹30 lakh loan for 20 years at 7.50%. If your rate goes up to 7.75%, your EMI goes up by about ₹460 a month. On a ₹50 lakh loan, it’s around ₹770. On ₹20 lakh, about ₹300.

Most people can handle that. The bigger number is the total. On a ₹50 lakh loan, that small monthly increase adds up to almost ₹1.9 lakh in extra interest over 20 years. Nobody really thinks about that when they see a ₹770 difference.

Should I pay a higher EMI or a longer tenure?

This is the part worth paying attention to.

A lot of banks won’t touch your EMI when rates go up. They’ll just add a few months to your loan. You won’t feel it, because your monthly payment is the same. But you’ll pay more interest overall, and your loan will run longer than you planned.

If you took your loan in your late thirties or forties, a longer tenure can push your payments into your retirement years. That’s not where you want to be.

So if your budget can take it, ask your bank to raise the EMI instead. Most banks will do it if you ask.

What should I do this week?

1. Check your loan statement or banking app to see if your loan is repo-linked, MCLR-linked or fixed.
2. Call your bank and ask how they’ll apply the change. Tell them if you’d rather pay a higher EMI.
3. If you have some spare savings, plan a small prepayment every year. Even one extra EMI a year can cut a few years off your loan.
4. Look at what other banks are offering. If your rate is a lot higher, a balance transfer might be worth it, but check the fees first.
5. Keep three to six months of EMIs saved up, just in case.

Should I still buy a home in Pune?

If you’re buying a home to live in, I don’t think a 0.25% hike should change your plans. It’ll change your EMI a little, but whether you can afford the home, whether the location works for you, and whether the developer delivers on time matter a lot more.

People are still buying, too. ANAROCK’s data shows housing sales across the top seven cities went up 3% in Q3 2026 compared to last year. CREDAI Pune says demand in the city is steady, mostly because of jobs and better roads. The RBI has also raised its growth forecast to 7.1% for this year.

What I’d expect is that buyers will take a bit longer to decide. They’ll compare more, ask more questions and push harder on price. That’s fair.

Does it matter if the home is under construction?

A little. With an under-construction home, the bank pays the developer in parts as the building comes up. You only pay interest on what’s been paid out so far, so the hike hits a smaller amount in the beginning.

If you’re looking at upcoming projects or ongoing residential projects in Pune, ask the developer to explain the payment plan and when each stage is due. If you’re considering a project like Atman Nirvana, or comparing other premium residential projects in NIBM Road, check how those payments line up with your loan. It changes how much interest you’ll pay before you get the keys.

What if my society is going for redevelopment?

Redevelopment in Pune has picked up a lot over the last few years. Many old housing societies are being rebuilt, and members usually get a bigger flat in the new building. Some people also buy extra area on top of what they’re given.

If you’re planning to take a loan for that extra area, the new rate will apply to it. Work out what the EMI will be before you sign.

A few things for first-time buyers

Try to keep your EMI under 35 to 40% of what you take home each month. If you can put down a bigger down payment, do it, because a smaller loan means rate changes sting less.

Check your loan eligibility again, too. Banks may offer you a little less now than they would have a few months ago. And remember the extra costs, like stamp duty, registration, GST on under-construction flats and interiors. People often forget these until the last minute.

If you’re waiting for rates to drop before you buy, it could be a long wait.

To sum up

For most families, this hike means a few hundred rupees more each month. That’s manageable. What matters more is knowing what kind of loan you have and talking to your bank before the change kicks in. If you’re looking at new residential projects in Pune right now, factor the new rate into your budget and don’t stretch further than you’re comfortable with.

At Vasudha Realty, we’d always rather see buyers take a little more time and make a choice they’re happy with for years.