The hysteretic magnetoresistance of granular high-temperature superconductor (HTSC) HoBa2Cu3O7-δ is investigated. Superconductors of the YBCO family with magnetic rare earth elements (Nd, Ho, Er, Sm, Yb, Dy) in place of yttrium are characterized by a significant paramagnetic contribution to the total magnetization. Impact of this paramagnetic contribution on the magnetotransport properties is analyzed using the concept of an effective field in an intergranular medium. Lines of magnetic induction from paramagnetic moments do not concentrate in intergranular boundaries, and, thus, have an insignificant effect on magnetotransport properties of granular HTSC. At the same time, there are strong concentration of magnetic flux in the intergranular boundaries due to Meissner currents and Abrikosov vortices. This magnetic flux compression determines the magnetotransport properties of granular HTSCs, including YBCO with magnetic rare earth elements.