SBI hikes risk premium on floating rate home loans, effective rates go up
- For SBI home loans linked to repo rate up to ₹30 lakh, the effective rate, which is EBR (external benchmark rate) plus spread, now stands at 7.40%
The country's largest lender SBI has increased the risk-premium it charges on home loan rates that are linked to repo rate, making the effective rates higher. The revision by SBI comes just a month after it had reduced home loan rates by 75 basis points. For home loans up to ₹30 lakh, the effective rate, which is EBR (external benchmark rate) plus spread, now stands at 7.40% as against 7.20% on April 1, 2020. The new rates came into effect from May 1, as per information available on its website. The EBR remains unchanged at 7.05%.
Here are 5 things to know about the latest change:
1) For SBI home loans above 30 lakh and up to ₹75 lakh, effective interest rate has been increased to 7.65% from earlier rate of 7.45%. For home loans above ₹75 lakh, the new rate stands at 7.75% as against 7.55% earlier.
2) The bank had last revised its External Benchmark Linked Lending Rate (EBR) and Repo Linked Lending Rate (RLLR) on April 1, 2020, immediately after the RBI announced reduction in repo rate by 75 basis points.
3) Citing a senior bank official, Press Trust of India reported that the increase in spread reflects stress due to COVID-19 impact in the market.
4) SBI on Thursday cut its MCLR rate by 15 basis points while also reducing its retail fixed deposit rate. The country's biggest bank also introduced special deposit scheme for senior citizens, called 'SBI Wecare Deposit', to safeguard their interests in the current falling rate regime. Under this new product, an additional 30 basis points premium will be payable for senior citizens retail term deposits with '5 Years and above' tenor only, it said.
5) After the latest revision, the SBI's marginal cost of funds based lending rate (MCLR) comes down to 7.25% from 7.40% with effect from May 10. Consequently, EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by approx ₹255.00 for a 30 year loan of ₹25 lakh, it said.
This is the 12th consecutive reduction in the bank's MCLR, the lender added.
Last month, SBI had trimmed the MCLR by 35 basis points across all tenors effective April 10. (With Agency inputs)
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First Published:8 May 2020, 01:51 PM IST
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