pnb home loan interest rates: PNB increases home loan interest rates: How much will your EMI increase | Popgen Tech


The Punjab National Bank (PNB) has increased the interest rate on housing loans. The bank raised the repo-linked lending rate (RLLR) by 50 basis points (100 bps = 1%) from 7.70% to 8.40%.

Along with this, the bank has also increased the marginal lending rate (MCLR) by 0.05% on all mandates. The bank announced an increase in the base rate by 5 bps. “The Base rate has been revised from 8.75% to 8.80% wef 01-10-2022,” the bank’s website said.
PNB MCLR rate on October 1, 2022

MCLR Tenor Existing MCLR Revised MCLR from October 1, 2022
During the night 7.05% 7.10%
A month 7.10% 7.15%
Three months 7.20% 7.25%
Six months 7.40% 7.45%
A year 7.70% 7.75%
Three years 8.00% 8.05%

The increase in the interest rate, typically charged on home loans, came after the Reserve Bank of India (RBI) raised the key policy rate for the fourth consecutive time since May 2022.

How much will the home loan EMI increase?
All home loans disbursed by banks are currently linked to an externally benchmarked lending rate (RLLR). With the latest hike in RLLR by 50 bps, here is an example that shows how your EMI outgo is likely to be impacted.

Let’s say Mr. X took a home loan of Rs 30 lakh for a tenure of 25 years. The old interest rate charged on a home loan is 7.90% and the new interest rate is 8.40%.

Loan amount Rs 30,00,000
Mandate 25 years
Old interest rate 7.90%
Old EMI release Rs 22,956
New interest rate 8.40%
New EMI release Rs 23,955
Increase in EMI Rs 999

For the purpose of the calculation, it is assumed that no credit risk premium is charged by the bank.What is the difference between MCLR and RLLR loan regimes?
If you have taken a home loan before 1 October 2019, then your home loan is likely to be linked to the MCLR regime. Under the MCLR-based lending regime, home loans are typically linked to the one-year MCLR rate.

As per RBI guidelines, “The Marginal Lending Rate based on the Cost of Funds (MCLR) prevailing on the date of first disbursement, whether partial or full, shall be applicable till the date of the next reset, regardless of benchmark changes during the interim. Future reset dates shall be determined accordingly. The periodicity of the reset under the MCLR should correspond to the term/maturity of the MCLR to which the loan is linked. The reset periodicity should be one year or less. The exact periodicity of the reset should form part of the terms of the loan contract.”

On the other hand, if you have taken a home loan on or after 1 October 2019, then the interest rate on your home loan is determined on the basis of a lending rate of external reference. As per RBI guidelines, a benchmark can be one of the following:

  • Reserve Bank of India policy repo rate
  • Government of India 3-Month or 6-Month Treasury Bill Yield published by Financial Benchmarks India Private Ltd (FBIL)
  • Any other reference market interest rate published by FBIL.

The interest rate under the external benchmark shall be reset at least once every three months. Therefore, any change in the external benchmark is passed on to the borrower faster as compared to the MCLR based lending regime.


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