As a result of the hike, loan borrowers who take up home loans against the benchmarks will pay more in equivalent monthly installments (EMIs) from these institutions.
Loan interest rates will change for both new and existing borrowers.
RBL Bank home loan rates
RBL Bank revised their Repo Linked Lending Rate to 11.60% effective from February 08, 2023. Base Rate of RBL Bank Ltd stands at 8.80% and Prime Lending Rate (PLR) of RBL Bank Ltd is 16.25% with effective from December 28, 2022.
Bank of India home loan rates
Bank of India revised their Repo Linked Lending Rate to 9.35% effective from February 08, 2023. According to the bank website, “The effective RBLR w.e.f 08.02.2023 is 9.35% as per the revised Repo rate (6.50%).” The bank’s Base Rate has been revised from 8.80% pa. to 9.10% pa. effective from January 1, 2023.
How does the RBI’s decision affect loans?
The cost of funds for banks often increases when the RBI raises the repo rate. The money they borrow from the RBI, banks will have to pay more. As a result, banks raise the interest rates on their loans, passing along the expense to borrowers and raising EMIs.RBI repo rate hike
Since May of last year, the central bank has increased the repo rate six times in a row. As a result, between May 2022 and February 2023, the repo rate increased generally by 2.5%, from 4% to 6.5%.
Impact on home loan EMIs under different benchmark regimes
The benchmark regime under which the borrowers are repaying their loans often determines how the interest rate increase is passed on to the borrowers. Your EMI will climb the fastest and be equal to the increase in the repo rate if your house loan is linked to the repo rate and was taken out under the External Benchmark Linked Rate (EBLR). The transmission is, however, somewhat slower for base rate-linked loans while it is the slowest for MCLR-linked loans.