On Thursday, Indiabulls Housing Finance (IBHFL) said it would raise the reference rate for all loans by ten basis points from Thursday, September 15. The revised reference rate will apply to new customers and will take effect for existing borrowers from the next payment cycle in October.

The company said that borrowers and co-borrowers would start at 8.7% on loans of up to Rs 35 lakh.

Earlier, IBHFL increased lending rates by 25 basis points, effective for new customers from August 1 and for existing customers from August 5. In an August 4 press release, Indiabulls announced a 20-basis point increase in home loan rates.

So far this fiscal year, the RBI has raised the repo rate by 140 basis points to 5.4%. An increase of 50 basis points was announced at the August review. RBI norms require banks to review their monthly lending rates against the marginal cost of funds.

When the RBI raises its repo rate, it increases the cost of funds for banks. As a result, banks need to pay more for money borrowed from the central bank. The lender then passes the cost on to the borrower by raising the lending rate, making the EMI more expensive. Both new and existing borrowers have seen their loan rates rise.