Following the 24th June decision by the Reserve Bank of India, the country’s largest bank, State Bank of India, has decided to increase its floating home loan rate by 50 basis points across all tenors. This new rate has been into effect from 27 June, the day on which the bank had increased its PLR by 0.5 per cent.
SBI said in a release that for home loans of up to Rs. 30 lakh with 20 years and 25 years tenure, the interest rate has been increased to 11 per cent against 10.5 per cent, a hike of 0.5 percent.
In monetary terms, this means that the equated monthly installment (EMI) for 20 year EMI would go by Rs. 35 to Rs. 1,035 while for 25 years would go up from Rs. 945 to Rs. 980 per one lakh.
With a maturity period between 10 and 15 years, the interest rate has gone up to 10.75 percent. EMIs under these maturities would go up by Rs. 35.
As against 10 percent earlier, the new rate of interest for five years is 10.5 percent. EMI in the category would rise by Rs. 25 to Rs. 2150 per one lakh.
For housing loans above Rs. 30 lakh, the increase is 0.5 per cent across all tenors. The maximum rate in the segment has gone up to 11.25 per cent.
However the bank hasn’t changed the fixed rate home loan and it still stands at 12.75 percent. A bank official said that floating interest rate is linked to State Bank Advance Rate (SBAR) 12.75 per cent per annum.
On 24th June, the Reserve Bank had decided to increase two key rates, the repo rate and CRR in order to reduce the money supply in the economy. Following that announcement, most of the banks resorted to a hike in their lending rate to consumers.
Many private sector banks like HDFC, ICICI Bank have already increased home loans rate by 0.75 per cent.