Lending rates are going to rise with the Reserve Bank of India (RBI) raising the key interest rate by 25 basis points to 5.50%, indicating that home loan borrowers will need to pay higher EMIs.

Several banks have already announced an increase in their lending rates just after the RBI hiked the benchmark repo rate, implying that loans will get expensive for borrowers. Among them are Punjab National Bank (PNB), Indian Bank, Bank of Baroda, Bank of India, Indian Overseas Bank and Tamilnad Mercantile Bank.

PNB, in a regulatory filing, said that consequent upon an increase in the repo rate by the RBI, the bank has revised Repo Linked Lending Rate (RLLR) from 8.10% (including BSP of 0.35%) to 8.35% (including BSP of 0.35%) with effect from 8 October.

However, the country's second-largest public sector lender said the Marginal Cost of Lending Rate (MCLR) and Base Rate would remain unchanged.

Chennai-based public sector lender Indian Bank also increased its Repo Linked Benchmark Lending Rates (RBLR) to 8.20% against the existing 7.95%. The revised rate would be effective from 8 October.

Bank of Baroda increased its RBLR to 8.15% from the existing 7.90%, an increase of 25 basis points.

Bank of India and Indian Overseas Bank (IOB) also raised its RBLR to 8.35% effective 8 October.

Private lender Tamilnad Mercantile Bank increased its RLLR to 8.5% from the existing 8.25%.

Other lenders are expected to announce soon an increase in their benchmark lending rate in line with RBI's decision.

“The impact will be quicker for borrowers with floating-rate home loans linked to external benchmarks such as the repo rate. Existing borrowers should check their loan's benchmark and reset frequency to understand when the rate hike could affect their repayments,” said Paisabazaar CEO Santosh Agarwal.