Loans are set to get costlier after the RBI raised the policy repo rate by 35 basis points on Wednesday.

Bankers said the effect will be immediately felt on loans that are linked to an external benchmark rate (EBR) such as the repo rate where the hike will be fully passed on to customers. All banks had moved to an interest rate linked to an external benchmark from October 2019.

Earlier, the lending rates were based on the marginal cost of funds-based lending rate or MCLR which is determined by deposit rates, operating costs and the cost of maintaining the cash reserve ratio.

``There will be a 30 basis point hike in loans that are linked to external benchmark. Banks will also raise their MCLR rates, though the increase will be relatively smaller,’’ a banker said. He said the vision will hit both existing and new customers.

``This hike will undoubtedly push up home loan interest rates, which had already crept up after four consecutive rate hikes this year.

“However, as long as interest rates remain in single-digits the impact on housing will at best be moderate,’’ Anarock chairman Anuj Puri said.