State Bank of India hikes home loan rates by up to 30 basis points; other lenders may follow suit

Mumbai: State Bank of India (SBI) has raised its home loan rates that are linked to repo rate by up to 30 basis points, a move which may be followed by other lenders. The country’s largest lender has also hiked effective interest rates on personal loans against the property by 30 basis points. 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. [caption id=“attachment_4198517” align=“alignleft” width=“380”] Representational image. Reuters[/caption] With market leader SBI making the move, other lenders are also likely to follow suit. While SBI has kept the external benchmark-linked lending rate constant at 7.05 percent, the increase in home loan rates has been done by raising margins by up to 30 basis points across various home loan products. Click here to follow LIVE news and updates on stock markets The new rates came into effect from 1 May, as per the information available on its website. SBI has been offering home loan and few other loans including personal loan against property and reverse mortgage since October last year to new borrowers. In the wake of the pandemic and subsequent nationwide lockdown, there has been a 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 financial market indicates that there is some increase in risk perception for borrowers and the real estate firms which is getting reflected in the credit risk premium charged by the bank, the official said. Despite the increase in the spread, SBI continues to provide home loan at the most competitive rate. The revision by SBI comes just a month after it had reduced home loan rates by 75 basis points. The bank had last revised its External Benchmark Linked Lending Rate (EBR) and Repo Linked Lending Rate (RLLR) on 1 April, 2020, immediately after the RBI announced a reduction in repo rate 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 percent as against 7.20 percent on 1 April, 2020. The effective rate for home loans above Rs 30 lakh and up to Rs 75 lakh has been increased to 7.65 percent from an earlier rate of 7.45 percent. For home loans above Rs 75 lakh, the new rate stands at 7.75 percent as against 7.55 percent earlier. The spread under the Maxgain home loan category has been increased by 30 basis points. The effective rate for Maxgain home loans up to Rs 30 lakh has been hiked to 7.75 percent from 7.45 percent. The bank has also increased the spread for its Personal Loan Against Property (P-LAP) by 30 basis points. The effective rate for P-LAP up to Rs 1 crore has been raised to 9.20 percent as against 8.90 percent as on 1 April, 2020. For loans above Rs 1 crore and up to 2 crore, the effective rate stands at 9.70 percent as against 9.40 percent earlier.