The RBI has raised its repo rate by 25 basis points to 5.50%, making borrowing costlier. PNB Housing Finance expects a modest benefit to its net interest margin, but borrowers should distinguish this lender-level gain from changes in their own loan costs.

MD and CEO Ajai Shukla told PTI that the company's funding is not entirely linked to the repo rate. It uses a mix of MCLR-linked borrowing, commercial paper, National Housing Bank refinance and non-convertible debentures. He expects a possible margin improvement of 5-8 basis points, rather than an immediate 25-basis-point benefit across the loan book.

Separately, Crisil has upgraded PNB Housing Finance to AAA/Stable. Shukla said this could lower its borrowing costs, particularly bank term loans, which account for 40% of its resources. He said lower funding costs would translate into cheaper customer loans. This is a benefit of the rating upgrade, not a promise that the RBI hike will reduce home loan rates.

Meanwhile, PNB, Bank of India, Bank of Baroda and Indian Bank have raised their repo-linked lending benchmarks. Affected borrowers may face higher EMIs or longer repayment periods. Borrowers should ask their lender how the revision will affect their loan and consider affordable prepayments to limit additional interest.