These banks have increased home loan interest rates after RBI repo rate hike

In an effort to fight inflation, the Reserve Bank of India (RBI) raised the repo rate once more. The central bank raised the repo rate by 35 basis points (bps; 100 basis points = 1%) to 6.25% in its most recent monetary policy announcement on December 7, 2022.

Many banks, including Bank of Baroda, Bank of India, and Indian Overseas Bank, raised their lending interest rates in response to the RBI move.

Also read: How to reduce your home loan EMI burden


Bank of Baroda loan rates
Bank of Baroda has revised the repo-linked lending rate with effect from October 1, 2022. As per the website, “In terms of guidelines issued by Reserve Bank of India regarding implementation of External Benchmark Based Lending rates. Bank has introduced Baroda Repo Linked Lending Rate (BRLLR) in respect of all Retail Lending products w.e.f 01.10.2019. RATE OF INTEREST ON VARIOUS LOANS LINKED WITH BARODA REPO LINKED LENDING RATE (BRLLR)- w.e.f. 08.12.2022.
For Retail Loans applicable BRLLR is 8.85% w.e.f. 08.12.2022 (Current RBI Repo Rate: 6.25% + MarkUp/Base Spread 2.60%).

Bank of India home loan rates
According to the Bank of India website, “The effective RBLR w.e.f 07.12.2022 is 9.10% as per the revised Repo rate (6.25%).” Also, Bank of India has hiked MCLR by 25 bps for all other tenures. Following the increase, the Bank of India's one-year MCLR is now 8.15%, up from 7.95% previously, and its six-month MCLR is 7.90%, up from 7.65% last month with effect from December 1, 2022.

Indian Overseas bank home loan rates
According to the Bank BSE regulatory filing, “Bank has revised the RLI-R to 9.107. (i.e. 6.25% + 2.85% = 9.107") with effect from 10.12.2022. The above information pursuant to Regulation 30 of SEBl (LODR) Regulations, 2015 may be taken on record.

The Indian Overseas Bank (IOB) also increased the marginal cost of funds (MCLR) across tenures by 15 to 35 basis points.

Impact on EMI
Borrowers are the worst impacted due to these repo rate hikes. Existing borrowers, who have taken loans on floating rate basis such as home loans, will see their EMIs going up further due to the current repo rate hike. Tenure extension option for many existing home loan borrowers would have been exhausted by now and they will be compelled to pay a higher EMI.

Most new borrowers, whether fixed or floating, will need to pay higher EMIs for their loans.
The impact on your home loan EMI will largely depend upon the remaining tenure of the loan. Higher the remaining tenure, higher would be the percentage increase in your EMI due to the cumulative rate hike of 2.25% since May this year.

For a Rs 30 lakh home loan taken for 20 years in March this year, if the interest rate goes from 7% in April this year to 9.25% in January 2023, the EMI would go up from Rs 23,258 to around Rs 27,387 to repay the loan within the original tenure, which is an increase of 17.75%. However, if the tenure was 30 years, your EMI increase would be around 23%.

Also read: RBI repo rate hike: Pay up to 23% higher EMI on your home loan than in April