SBI home loan interest rates increased, EMIs to increase

New Delhi : The State Bank of India (SBI) has increased its interest rate on home loans by 30 basis points, a move that may be followed by other banking companies.

The decision to increase margin has been taken amid market indications of increased credit risk for borrowers and realty firms in the wake of coronavirus pandemic, according to a senior official.

While SBI has kept the external benchmark-linked lending rate constant at 7.05 per cent, the increase in home loan rates has been done by raising margins by up to 30 basis points across various home loan products.

The new interest rates have come to effect from May 1, according to the information mentioned on the official website of the bank.

In the wake of the pandemic and subsequent nationwide lockdown, there has been disruption in economic activities as well as in income for many individuals and companies.

The senior official at the SBI said spread is the credit risk premium and an increase in spread reflects stress due to COVID-19 impact in the market.

The revision in SBI home loan interest rates has come within a month when it had reduced it by 75 basis points.

For home loans of up to Rs 75 lakh, SBI has increased the spread by 20 basis points. For home loans up to Rs 30 lakh, the effective rate, which is EBR plus spread, now stands at 7.40 per cent as against 7.20 per cent on April 1, 2020.

The effective rate for home loans above Rs 30 lakh and up to Rs 75 lakh has been increased to 7.65 per cent from earlier rate of 7.45 per cent. For home loans above Rs 75 lakh, the new rate stands at 7.75 per cent as against 7.55 per cent earlier.

The bank has also increased the spread for its Personal Loan Against Property (P-LAP) by 30 basis points.