The country?s largest lender, State Bank of India (SBI) has hiked its interest rate on home loans upto 50 basis points. The revised rates have come into effect since June 27, 2008.
While the interest rate for home loans upto Rs 30 lakh for a period of 20 years will now be 11% from 10.50%. Hence the EMI for a loan of Rs 30 lakh to be payable in 20 years will now be at Rs 1,035. But, there is no change in the fixed home loan rates, which stands at 12.75%. The tenure for the fixed home loan is upto 10 years. The borrowers of home loans over Rs 30 lakh will now have to pay an interest rate of 11.25% and hence their EMI will come to Rs 1,050. Speaking to FE, Nandakumar, general manager, personal banking, SBI, said that the home loan comprises of 15% of the total loan portfolio of the bank, which currently stands at Rs 300,000 crore. He maintained that there was a rise in the default rate in the home loan segment. “The reason being that we are offering various benefits to our customers,” he added.
Speaking of the existing home loan customers, Nandakumar said that though the revised rates will be applicable to existing customers too, they have been given options to either increase their EMI tenure up to 25 years or opt for prepayment of the loan. The BPLR of the bank (which is known as SBAR) was reduced to 12.25% in February 2008, and was restored to 12.75% on June 27, 2008.
