RBI Raises The Repo Rate Once More, Raising The Cost Of Home Loans

For Financial Year (FY) 2022–2023, the Reserve Bank of India (RBI) made its final change to the repo rate. The repo rate has increased by 25 basis points (bps), and it is currently 6.5 percent. Similar statements by the central bank were followed by the most recent increase of 35 bps in December 2022. examines the potential effects of the new repo rate on homebuyers and the borrowing rates offered by various banks. The Reserve Bank of India (RBI) announced the last increase in the repo rate for the current fiscal year (FY) 2022–2023 during its Monetary Policy Committee (MPC) meeting on February 8, 2023. The repo rate was increased by 25 basis points (bps) to 6.50 percent, and the MSF rate has increased to 6.75 percent by the top bank.

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The Reserve Bank of India (RBI), the country’s central bank, has announced six increases to the repo rate, the rate at which it lends money to banks and other financial institutions all over the nation, during the fiscal year 2022–2023 so far. The repo rate is currently 6.5 percent. After keeping the repo rate accommodating during the pandemic at 4%, the first repo rate change was announced in May 2022 with an increase of 40 bps. The RBI has since announced five additional increases to the repo rate. Three times a 50-bps hike was introduced, with a 35-bps boost being the most recent, in December 2022.

After the MPC meetings scheduled for May 4, June 8, August 5, September 30, and December 7 of 2022, these increases went into effect. It is anticipated that the last increase in lending rates for the fiscal year ending on March 31, 2023, will raise the interest rates charged by banks on home loans, affecting the average person’s ability to purchase a home.

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Increases that banks announced in March 2023

HDFC has raised its Repo Linked Lending Rate (RLLR) by an additional 25 basis points as of March 1, 2023. Also, across all tenors, Punjab National Bank (PNB) has raised the MCLR by 10 bps. The base rate of the State Bank of India (SBI) has increased from 9.4 percent to 10.1 percent by 70 basis points. The Benchmark Prime Lending Rate (BPLR) has also been changed by the bank from 14.15 percent to 14.85 percent. SBI has implemented both adjustments starting on March 15, 2023.


Banks’ updated MCLR rates

According to the tenors, which range from overnight to three years, the Marginal Cost of Funds Based Lending Rate (MCLR) varies. The MCLR change will apply to all borrowers of loans, both current and new.

Bank Tenor Old rate New rate
State Bank of India Overnight 7.85% 7.90%
One month 8% 8.10%
Three months 8% 8.10%
Six months 8.30% 8.40%
One year 8.40% 8.50%
Two years 8.50% 8.60%
Three years 8.60% 8.70%
Kotak Mahindra Overnight 7.80% 8.15%
One month 8.05% 8.40%
Three months 8.20% 8.55%
Six months 8.40% 8.75%
One year 8.55% 8.95%
Two years 8.85% 9%
Three years 9.05% 9.15%
Punjab National Bank Overnight 7.90% 8%
One month 8% 8.10%
Three months 8.10% 8.20%
Six months 8.30% 8.40%
One year 8.40% 8.50%
Three years 8.70% 8.80%
HDFC Overnight 8.20% 8.30%
One month 8.25% 8.30%
Three months 8.25% 8.35%
Six months 8.35% 8.45%
One year 8.10% 8.60%
Two years 8.60% 8.70%
Three years 8.70% 8.80%
Axis Overnight 8.55% 8.60%
One month 8.55% 8.60%
Three months 8.60% 8.70%
Six months 8.70% 8.75%
One year 8.75% 8.80%
Two years 8.85% 8.90%
Three years 8.90% 8.95%
Bank of Baroda Overnight 7.85% 7.90%
One month 8.15% 8.20%
Three months 8.25% 8.30%
Six months 8.35% 8.40%
One year 8.50% 8.55%


Bank price increases announced in January & February 2023

With effect from January 3, 2023, the Indian Bank revised its MCLR by 20–25 bps across tenors. PNB raised its RLLR by 25 bps in response to the RBI’s announcement of a repo rate modification. With effect from February 9, 2023, the RLLR was increased from 8.75 to 9 percent. Moreover, Bank of Baroda (BOB) increased its MCLR by five basis points for all tenors starting on February 12, 2023. With effect from February 12, 2023, Canara Bank unexpectedly reduced its RLLR by 15 basis points. The new RLLR for the bank is 9.25 percent. SBI also immediately boosted the MCLR by 10 basis points in each of its tenors.

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Increases declared by banks in December 2022

PNB, Bank of India, and ICICI Bank raised their MCLR by five basis points, 25 basis points, & 10 basis points, respectively, starting on December 1, 2022, in anticipation of an increase in the repo rate. The one-year tenor was increased by the Bank of India from 7.95 percent to 8.15 percent by 20 basis points. On December 7, 2022, it increased the Repo Based Lending Rate (RBLR) to 9.10 percent. From December 7, 2022, HDFC Bank also introduced MCLR changes for all tenors. HDFC Bank raised its Retail Prime Lending Rate (RPLR) by 35 basis points to 8.65 percent as of December 20, 2022. Home loans from the bank were offered to applicants with credit scores of 800 or higher at this rate. The Prime Lending Rate (PLR) of LIC Home Finance increased by 0.35 percent, bringing the institution’s minimum home loan interest rate down to 8.65 percent.


Increases declared by banks in November 2022

As of November 1, 2022, PNB, Bank of India, & ICICI Bank each upped their respective MCLR by as much as 30 basis points, 15 basis points, & 20 basis points. For PNB, the MCLR for all tenors was between 7.40 and 8.35 percent. The one-year MCLR for Bank of India increased from 7.80 percent to 7.95 percent, while the rest of the tenors saw an increase of 10 basis points. The MCLR of the ICICI Bank was revised to a range of 8.05-8.30 percent. On November 3, 2022, Indian Bank increased its loan rates by 15 to 35 basis points.

Also, starting on November 5, 2022, the DCB Bank increased its MCLR by 27 basis points for all tenors. The new lending rates ranged from 9.58 to 10.23 percent. Canara Bank increased its loan rates by 15-20 basis points beginning November 7, 2022. Also, it updated RRLLR to 8.80 percent. With effect from November 10, 2022, the Bank of Maharashtra has increased its one-year MCLR to 7.90 percent and its one-month tenor by five basis points to 7.50 percent. With effect starting on November 15, 2022, SBI has raised its loan rates by up to 15 basis points for all tenors.

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Updates on October 2022 home loan interest rates

The Prime Lending Rate (PLR) at LIC Home Finance increased by 0.50 percent. With effect from September 30, 2022, the ICICI Bank also increased its External Benchmark Lending Rate (EBLR) by 50 basis points. From September 30, 2022, Bank of India revised its RBLR to 8.75 percent. Also, the bank increased the MCLR in several tenors by 10 to 20 basis points. Both HDFC Limited and SBI increased their lending rates by 50 basis points as of October 1, 2022. SBI lowered its EBLR and RLLR while HDFC upped its RPLLR. PNB boosted its RLLR from 7.7 percent to 8.4 percent by 50 basis points.

With effect from October 1, 2022, the bank has raised its MCLR by five basis points for all tenors. Beginning on October 1, 2022, BOB increased its RLLR. Axis Bank raised their MCLR by 25 basis points for all tenors starting on October 18, 2022.


Repos and home loan interest rate updates for September 2022

On September 1, 2022, PNB increased its MCLR by 0.05 percent across all tenors. Also raising the rate by 10 basis points, effective September 1, 2022 and September 3, 2022, respectively, were ICICI Bank and Indian Bank. The MCLR for ICICI Bank was between 7.75 percent & eight percent, while the MCLR for Indian Bank ranged from 6.95 to 7.75 percent. The MCLR of Canara Bank was also raised by up to 0.15 percent. Also raising their MCLR rates by up to 0.10 percent were Indian Overseas Bank and BOB. While Indian Overseas Bank’s new rates went into effect on September 10, 2022, BOB’s rates took effect on September 12, 2022.

The RBI’s repo rate increases, which began with an increase of 40 basis points in May 2022, are believed to be the cause of the lending rates’ ongoing higher revisions. The RBI issued two additional modifications that increased the repo rate by 50 basis points each and were announced in June & August of 2022, respectively.


Bank hikes announced in August 2022

With effect from August 15, 2022, the SBI increased its MCLR for the third time by 20 basis points across all tenors. Due to a repo rate increase of 90 basis points, the bank previously increased its lending rates in June 2022. (bps). On August 5, 2022, the Central Bank of India (RBI) raised the lending rate once more, this time by 50 basis points. As a result, different banks’ lending rates were updated.

With effect from August 5, 2022, the ICICI Bank further boosted its EBLR to 9.10 percent following the upgrade. The RLLR was increased by PNB to 7.90% beginning August 8, 2022. The Housing Development & Finance Corporation (HDFC) Bank also raised its RPLR by 25 basis points beginning on August 9, 2022. Furthermore, as of August 12, 2022, BOB began raising the MCLR by up to 0.20 percent across tenors. In addition to the MCLR increase, SBI also increased its EBLR and RLLR by 50 basis points. Moreover, by 0.50 percent, Bajaj Home Finance and LIC Housing Finance raised their interest rates on loans. When LIC Home Finance offered loans with interest rates starting at 8%, Bajaj Housing Finance announced interest rates starting at 7.70%.

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Hikes declared by banks for April to June 2022

BOB, Axis Bank, and Kotak Bank followed SBI’s lead and increased their MCLR by five basis points over the course of a week between April 12 and April 18 in anticipation of a repo rate increase. From May 1, 2022, HDFC Bank enhanced their RPLR. On June 1, 2022, the rates were further increased by five basis points. The bank’s floating home loan rates were impacted by the hike. With effect from May 4, 2022, ICICI Bank also raised its External Benchmark Lending Rate (EBLR) to 8.10 percent. Also, starting on June 1, 2022, ICICI Bank & Punjab National Bank (PNB) increased their MCLRs by 30 basis points and 15 basis points, respectively. The statement came after the RBI raised its repo rate from four percent since March 2020 to 4.40 percent on May 4, 2022.


External Benchmark Lending Rate (EBLR): What is it?

Banks will only establish an interest rate on loans that is as low as the external benchmark lending rate (EBLR). It is based on external benchmarks like the repo rate. The benchmark is set for loans with variable interest rates.


What is RLLR, or Repo Linked Lending Rate?

The repo linked lending rate (RLLR), which is dependent on the repo rate set by the RBI, is a lending rate. The change in repo rate has an immediate effect on the RLLR. If a loan is based on RLLR, the floating interest rate will change according to changes in the repo rate.

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What does MCLR mean and how does it affect your house loan EMI?

Following the MCLR’s introduction in 2016, the media has covered the RBI’s interest rate reductions. The Equated Monthly Instalments (EMI) of many loans, including personal, vehicle, and house loans, are affected by changes in the MCLR. They are anticipated to increase in price due to a revision higher. Also, banks are anticipated to follow suit by raising their lending rates as soon as the RBI announces any increase in the repo rate.

The minimal interest rates a bank must charge on a loan is known as the “MCLR,” or benchmark interest rate. To maintain uniformity & better pricing for customers, the RBI set this in 2016.


Would the rising interest rates deter people from buying homes?

A rise in lending rates, particularly for homebuyers, would cause market disruption, claim real estate experts. The combination of this and builders’ increased use of units in new housing societies as a result of rising raw material costs could further erode consumer confidence. The desire for home ownership may short-term decline. To balance the impact of the rise in house financing and new home expenses, however, it will mostly depend on State governments’ decisions to extend or offer some concessions on stamp duty and registration charges.

The real estate industry anticipates favourable home loan rules in light of the RBI’s periodic announcement of changes to the repo rate so that homebuyers can keep making investments and the real estate market unaffected.






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