RBI Set for Another Rate Hike in December? What Buyers Should Know

RBI Likely to Hike Again in December: What It Means for Housing Demand and Prices

Economists now expect the Reserve Bank of India to raise its policy repo rate again when the Monetary Policy Committee meets from 2 to 4 December 2026. The decision is due on 4 December at 10:00 IST. The current repo rate is 5.50 per cent, after a 25 basis point increase in October 2026, which was the first hike since February 2023. The question for most economists is whether the next move is another 25 bps or a larger 50 bps step.

Impact on Homebuyers

The most direct effect falls on floating-rate home loan borrowers. Take a Rs 50 lakh loan over 10 years at 8 per cent. A 25 bps rise lifts the EMI to about Rs 61,326, which is roughly Rs 662 more each month or close to Rs 7,944 a year. For a buyer already stretching to qualify, that gap can decide whether a shortlisted flat stays on the list.

Demand is unlikely to fall evenly across segments. Anarock's view is that buyers will become more selective and decision timelines will stretch, especially in homes priced below Rs 75 lakh and in the Rs 75 lakh to Rs 2 crore band. CBRE's read is more measured. It expects the impact to stay limited in the mid and premium segments, where underlying demand is still healthy. Developers in the premium and luxury space have made a similar argument, that a single 25 bps move will not materially dent buyers at the top end.

Prices are the other side of the trade-off. Average residential prices across the top seven cities rose 7 per cent year-on-year, according to ANAROCK Research for October 2026, and sales in the cities reached roughly 100,220 units in the July to September quarter. Costlier loans and higher prices together can stretch affordability further, which means buyers should compare the monthly EMI they can carry against the price they are being quoted, not just the sticker figure.

So should buyers wait or act? If you have a loan approval that is close to lapsing and your budget has headroom, locking in terms before 4 December makes sense. If your budget is tight, a pause of a quarter may cost less than a bigger EMI, though it is worth remembering that waiting does not guarantee lower prices.

Expert Analysis

The case for another hike rests on inflation. Retail inflation rose to 6.09 per cent in October 2026, breaching the RBI's upper tolerance limit of 6 per cent for the first time in two years, up from 5.54 per cent in September. DBS Bank's Radhika Rao argues that headline inflation has not peaked yet and that the central bank's quarterly projections are likely to be revised higher, which is why she expects a second successive increase in December.

Not everyone is as convinced. Vikram Chhabra of 360 ONE Asset expects another 25 bps, but notes that a sharp fall in crude prices and a firmer rupee give the RBI some room to manoeuvre. Before October, Nomura expected only 25 to 50 bps of tightening in total, while Bank of America, ANZ and Goldman Sachs had pencilled in a wider 75 to 100 bps cycle. A Union Bank of India research note has suggested the total cycle could reach 75 bps.

The RBI has been clear that the pace from here depends on incoming data. Its October statement projected headline inflation averaging close to 5.8 per cent over the next three quarters, with core inflation at 4.4 per cent this year. Two members of the committee, Dr. Nagesh Kumar and Prof. Ram Singh, had preferred to hold the stance neutral in October. The RBI has also said that a cut is off the table for now, and that the next step will be either a hike or a pause. For the housing market, the signal is that borrowing costs are unlikely to fall in the near term.

What to Expect Next

Monthly CPI releases before the December meeting will show whether inflation is tracking above or below the RBI's projected path of 6.0 per cent for October to December and 5.7 per cent for January to March. The July to September GDP estimate, usually released at the end of November, will be the last growth reading before the committee sits. Once the 4 December decision is out, watch how banks reprice floating-rate home loans in the following weeks, since that is when the real EMI change reaches borrowers. The next MPC meeting after December is scheduled for 3 to 5 February 2027.

Related Projects & Areas Affected

• Affordable homes below Rs 75 lakh: the segment most sensitive to EMI changes, where buyers are expected to delay decisions the most.
• Mid-income homes from Rs 75 lakh to Rs 2 crore: likely to see longer decision cycles, though underlying demand remains supported.
• Premium and luxury housing: expected to feel the least impact from a 25 bps move, according to several industry voices.
• Pre-launch and new-launch projects: higher funding costs may make developers more cautious about launching fresh phases.
• Retail and commercial real estate: softer festive consumption and higher financing costs could slow near-term leasing and fund activity.