By Ai Powered PMC Akbar Jiwani
Special Correspondent: Real Estate
SUB-HEADLINE: First rate hike since February 2023 puts home loan EMIs under watch just as the festive season begins; commercial real estate largely insulated, retail more exposed
Mumbai, 8 October 2026: The Reserve Bank of India’s Monetary Policy Committee raised the repo rate by 25 basis points, from 5.25% to 5.50%, on 7 October 2026, ending a run of four consecutive holds. It is the first hike since February 2023, and the central bank has moved its stance to “calibrated tightening”. Analysts now see a pause or a further hike as more likely than a cut in coming meetings, which matters directly for India’s housing market at the start of the festive buying season.
WHY THE RBI MOVED
Reports cite inflation pressure from an El Niño-hit monsoon, rising energy costs, Gulf-related geopolitical uncertainty, tightening by global central banks, rupee weakness and higher crude prices. The economy itself remains strong: Q1 FY27 GDP grew 7.8%, and the RBI has raised its FY27 growth forecast to 7.1%. Lata Pillai, Head of Capital Markets, India, at JLL, described the move as “a pre-emptive measure to account for further inflation peaks later in the year”, citing projected CPI inflation of 5.2% this year and 5.7% next year.
WHAT IT MEANS FOR HOME LOAN BORROWERS
Entry-level home loan rates are around 7.1% to 7.75%, though many borrowers pay roughly 8% to 9.8%, according to Anarock. Floating-rate loans are expected to be repriced. Mehernosh Tata of Godrej Housing Finance said the hike “could mean a higher EMI, a longer loan tenure, or a combination of the two”, depending on loan structure and how the change is passed on.
AFFORDABLE AND MID-INCOME HOUSING MOST SENSITIVE
The most price-sensitive buyers are in affordable homes (under Rs 75 lakh) and mid-income homes (Rs 75 lakh to Rs 2 crore). Anuj Puri, Chairman of the ANAROCK Group, warned that “even a modest increase in EMIs will result in deferred purchase decisions” among affordable-housing buyers. Average residential prices in the top seven cities have already risen about 7% year-on-year in Q3 2026, stretching affordability further. Experts also expect some construction cost increases to be passed on to buyers.
Shekhar Patel of CREDAI said the increase in borrowing costs “could have some impact on sales during this period”, referring to the festive season. Pradeep Aggarwal of Signature Global noted that “a stable repo rate would have better sustained the current demand momentum.”
DEMAND FUNDAMENTALS REMAIN STRONG
Anarock data shows about 100,220 homes were sold in the top seven cities in Q3 2026, up 3% year-on-year and 10% quarter-on-quarter. Affordable housing accounted for 16% of those sales. Shishir Baijal of Knight Frank India expects affordability pressure in lower-priced segments but no major near-term disruption, backed by GDP growth, investment and construction activity.
COMMERCIAL AND RETAIL
Commercial real estate is unlikely to be directly affected, given steady demand from GCCs, technology, BFSI and other occupiers. Retail is more exposed: Puri said “some new mall projects could potentially be deferred until there is greater clarity on demand.” Real estate investment funds may also face higher project financing costs and become more selective, according to Ankur Jalan of Golden Growth Fund.
OUTLOOK
Industry voices agree the pace of future moves will matter more than this single hike. Anshuman Magazine of CBRE said the key question is “whether this increase stays a calibrated response rather than the start of a long tightening cycle.” Buyers are advised to review loan terms, compare lender offers and plan finances carefully before committing during the festive period.
Sources: Business Standard (7 Oct 2026, “RBI rate hike may pressure housing affordability, but demand seen resilient”); The Week (7 Oct 2026, “Mixed bag: How experts diverged in their reaction to RBI raising repo rate”).
