Is this best time to buy your dream house?:Banks may soon increase home loan interest rates; fixed rate vs floating rate – what should you select?

If you are planning to buy your dream house, you might want to act soon. Banks in India may raise interest rates on home loans in the coming months. The Reserve Bank of India (RBI) sets a key interest rate called the repo rate. This is the interest rate banks pay when they borrow money from the RBI. Because prices for everyday goods are rising (inflation), the RBI is expected to increase the repo rate in its next meeting to slow down inflation. When it costs more for banks to borrow money, they pass that cost on to customers. This means home loan interest rates may go up soon. How Higher Interest Rates Increase Your Monthly EMI? Your EMI (Equated Monthly Installment) is a certain amount of money you pay to the bank every month for your loan. When interest rates rise, your EMI goes up. Even a small rate increase can add up to a lot of money over time. Here is a simple example: What this means for your pocket: You pay ₹1,595 more every month. Over 20 years, a 0.5% rate increase means you pay ₹3.83 Lakh more in total interest. How can you save money by buying dream house now If you have already saved money for a down payment and found a house you like, buying now instead of waiting could save you money. Here is why: Lock in Lower Rates: Getting a home loan before rates rise lets you start with today’s lower interest rates. Get Better Deals from Builders: Right now, builders are eager to sell homes. You can negotiate better prices, cash discounts, or free extra features before higher interest rates cool down the market. Beat Future House Price Hikes: Property prices generally go up over time. If you wait a year or two for interest rates to drop, the price of the house itself may go up higher than your interest savings. Cheapest rates available currently: Home loan starting interest rates at some of the country’s major banks currently range from 7.00% to 7.45%. Bank of Maharashtra is offering home loans at the lowest starting rate of 7.00%, while the country’s largest public-sector bank, SBI, is starting its interest rates at 7.25%. Smart Steps Before You Buy Check Your Budget: Make sure you can comfortably pay your monthly EMI without stressing your monthly household expenses. Compare Multiple Banks: Interest rates and processing charges vary across lenders. Compare 3 to 4 banks before signing a deal. Check Your Credit Score: A high credit score (750 or above) helps you get the lowest interest rate offered by banks. Ask for fixed home loan interest rate not flexible: Ask your bank about fixed rates (rates stay the same) versus floating rates (rates move up or down with market changes) to pick what works best for you. Opting for fixed interest can prove to be a smart move as suppose you lock the deal at 7% interest and RBI hikes repo rate in October, then, that particular bank will also raise rates but you will keep paying EMIs at 7% interest (which will be lower). If you are financially ready, buying your dream home today before interest rates go up can save you a substantial amount of money over the life of your loan. When is the RBI meet? The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) will sit for a 3-day from 5 October to 7 October 2026. According to most of the analysts, the apex bank can increase the repo rate by 25 basis points (bps). Currently, the policy benchmark rate stands at 5.25%.