Fixed vs floating home loan rates: which should you choose?
Last verified: . Author: Priya Sharma. Reviewed by: Rajesh Mehta.
Short answer: A floating rate moves with a benchmark, usually the RBI repo rate, while a fixed rate stays the same for a set period. On 9 October 2026 every lender we checked charged more for fixed: 0.15% to 7.25% above its lowest floating rate. Floating is cheaper to start; fixed buys EMI certainty.
MoneyKarma (MyMoneyKarma Infomatics India Private Limited) is a home loan comparison and distribution platform, not a lender; the bank or housing finance company you choose sanctions the loan and sets your final rate.
What is the difference between a fixed and a floating home loan rate?
- Floating rate: your rate is a benchmark plus a spread. For most new loans the benchmark is the RBI repo rate. When the benchmark changes, your rate changes at the next reset. RBI requires external benchmark rates to be reset at least once every three months (RBI Master Direction).
- Fixed rate: the rate stays the same for a set period or for the full term. Some lenders fix it for 2 to 10 years and then move you to the floating rate.
- Hybrid: fixed for an initial period, then floating. Kotak offers 39, 52 or 65-month fixed periods (Kotak); ICICI Bank publishes 24, 37, 60 and 120-month fixed options (ICICI Bank).
How much higher are fixed home loan rates today?
| Lender | Fixed rate (p.a.) | Floating rate (p.a.) | Notes | Source | Verified on |
|---|---|---|---|---|---|
| ICICI Bank | Fixed for 24 months: 9.10% to 9.15%; 37 months: 8.90% to 9.15%; 60 months: 8.90% to 9.15%; 120 months: 10.75% to 10.85%; full term: 10.90% to 11.20% | 8.75% to 10.05% | Valid till 31 Oct 2026 | icici.bank.in | 9 Oct 2026 |
| Punjab National Bank | 8.45% to 10.85% (by CIBIL, LTV and tenure up to or above 10 years) | 7.45% to 9.35% | Festive campaign card, 01.10.2026 to 31.12.2026 | pnb.bank.in | 9 Oct 2026 |
| Bank of Baroda | 9.15% to 10.20% salaried (calculated: BRLLR 8.15% + 1.00% to 2.05%) | 7.45% to 9.20% (calculated) | BRLLR 8.15% w.e.f. 08.10.2026 | bankofbaroda.bank.in | 9 Oct 2026 |
| Union Bank of India | 11.40% to 12.65% (fixed for up to 5 years, by loan amount) | 7.15% to 9.35% | Card w.e.f. 24.07.2026 | unionbankofindia.bank.in (PDF) | 9 Oct 2026 |
| Kotak Mahindra Bank | 12% onwards (for existing customers switching to fixed) | 7.60% onwards | Also offers a hybrid rate: fixed for 39, 52 or 65 months, then floating | kotak.bank.in | 9 Oct 2026 |
| Axis Bank | 14.00% | 8.00% to 9.10% | Fixed rate applies across home loan variants | axis.bank.in | 9 Oct 2026 |
| PNB Housing Finance | 14.75% | 7.50% to 10.05% | No effective date shown | pnbhousing.com | 9 Oct 2026 |
On every card above, the lowest fixed rate is higher than the lowest floating rate at the same lender. The gap ranges from 0.15% at ICICI Bank (8.90% fixed for 37 or 60 months vs 8.75% standard floating) and 1.00% at Punjab National Bank (8.45% vs 7.45%) to 7.25% at PNB Housing Finance (14.75% vs 7.50%).
How do the EMIs compare? A worked example
Same lender, same loan, rates from ICICI Bank's page on 9 Oct 2026 (EMIs are our calculation):
| ICICI Bank, ā¹50 lakh, 20 years | Rate | Monthly EMI |
|---|---|---|
| Floating, lowest standard rate | 8.75% | ā¹44,186 |
| Floating after one 0.25% rise | 9.00% | ā¹44,986 |
| Fixed for the full term, lowest rate | 10.90% | ā¹51,270 |
The full-term fixed EMI is ā¹7,084 a month higher than the lowest floating EMI. For fixed to work out cheaper, the floating rate would have to rise by more than 2.15 percentage points and stay there for most of the loan. That is more than eight increases of 0.25%. For comparison, the repo rate was raised by 0.25% on 7 October 2026, from 5.25% to 5.50% (RBI MPC, 7 Oct 2026).
When does a fixed rate make sense?
- You need a predictable EMI for budgeting, and the premium over floating is small at your lender (for example ICICI Bank's 37 and 60-month fixed rates start 0.15% above its standard floating rate).
- You choose a short fixed period (2 to 5 years) during which you expect rates to rise, and you accept the switch to floating afterwards.
- You plan to keep the loan to term without large prepayments.
When does a floating rate make sense?
- The fixed premium is large (several lenders above charge 12% to 14.75% fixed against floating rates from 7.15% to 8.00%).
- You may prepay. RBI does not allow pre-payment charges on floating-rate loans to individuals for non-business purposes sanctioned or renewed on or after 1 January 2026 (RBI Pre-payment Charges Directions, 2025). That rule covers floating loans, so check your fixed-rate loan agreement for charges.
- You can absorb EMI or tenure changes when rates move.
Can I switch between fixed and floating later?
Usually yes, for a fee. At the time of a rate reset, a lender may, at its option, give you a choice to switch to a fixed rate under its board-approved policy; it must also let you choose a higher EMI, a longer tenure, or prepayment (RBI circular on reset of floating rates, updated 1 Oct 2025).
| Lender | Switching charge | Source |
|---|---|---|
| Axis Bank | Floating to fixed: 1%. Fixed to floating: 2%. Higher fixed to lower fixed: 0.5%. | axis.bank.in |
| Canara Bank | Floating to fixed or fixed to floating: 0.25% of the loan amount, minimum ā¹250 plus GST, maximum ā¹25,000 plus GST (EMI-based retail loans). | canarabank.bank.in |
| Kotak Mahindra Bank | Switch and foreclosure charges apply on fixed-rate loans as per its schedule of charges. | kotak.bank.in |
What happens to a floating rate after the October 2026 repo hike?
The repo rate is now 5.50%. Some lenders have already raised their benchmark: Bank of Baroda's BRLLR is 8.15% from 8 October 2026 (Bank of Baroda). If your loan is repo-linked, expect a rise of about 0.25% at your next reset. On a ā¹50 lakh, 20-year loan at 8.75%, that is ā¹800 more a month (ā¹44,186 to ā¹44,986), or a longer tenure if the lender keeps the EMI fixed.
How can MoneyKarma help me choose?
MoneyKarma (MyMoneyKarma Infomatics India Private Limited) is a home loan comparison and distribution platform, not a lender; the bank or housing finance company you choose sanctions the loan and sets your final rate. MoneyKarma can show fixed, hybrid and floating offers side by side so you can compare the EMI and the total interest cost.