SBI Home Loan Interest Rate: The SBI home loan interest is at a multi-year low. The previous low was seen around 2004 when the interest rate on home loans was around 7 per cent or even lesser than that. If you are looking to buy a home to stay and not for investment purposes, every time is the right time but in current times, one can certainly take advantage of the low-interest-rate environment. The EMI and the interest burden in a low-interest regime are lesser than when the rates go up.
“Home loan interest rates are at a 15-year low and may well spur demand for real-estate similar to what happened in 2004. While interest rates may go down, we are unlikely to see a major reduction from current levels. This is a good time for buyers to seriously look at acquiring real-estate given stability of real estate as an asset, low-interest rates, price discounts and attractive payment plans,” says Mani Rangarajan, Group COO, Housing.com, Makaan.com, PropTiger.com.
SBI home loans are available from 6.95 per cent to 7.35 per cent. The actual rate of interest for the borrowers depends on the gender, amount of loan, the risk profile of borrower, profession and the tenure of the loan.
Currently, for SBI, the home loan is available to some categories at 6.95 per cent. The SBI EBR for July 2020 is 6.65 per cent and for loans below Rs 30 lakh, there is a ‘Margin’ of 35 basis points or 0.35 per cent. So, effectively, the rate becomes 7 per cent. However, for women borrowers, there is a concession of 5 basis points. Hence, the effective rate of interest comes to 6.95 per cent for those borrowers.
But, remember, these are the floating rate of interest and will keep changing during the loan tenure.
As a new borrower taking a home loan from SBI, here is how it works – SBI will declare its EBR for each month based on which the home loan interest rate will be linked. Further, the bank will add a ‘Premium’ and will become the effective rate of interest on which the EMI calculation will be done.
Since October 1, 2019 banks are mandated to offer all loans including home loans based only on an external benchmark. In the case of most banks including SBI, it is the RBI’s repo rate which is set as the external benchmark. The Repo linked lending rate (RLLR) for SBI is called the SBI EBR. Every time, RBI revises the repo rate, the revision in the interest rate is much quicker for the borrower compared to the loans linked to MCLR.
But, will other banks and lenders also start cutting the home loan rates? Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com says, “As SBI is the largest lender in the country and also a trendsetter in many ways, other banks and HFCs are likely to follow suit, which augurs well for the real estate sector.”
The SBI EBR linked home loan is not for borrowers who had taken loans between April 1, 2016, and September 30, 2019, as they are based on bank’s MCLR. When RBI cuts repo rate, the banks did not pass-on much to the borrowers and hence lending based on external benchmark was introduced. “Banks have been very reluctant in passing interest rate cut to customers. But off late, SBI has started passing the benefit to end-users and this is indeed a welcome step by SBI. This will reduce the EMI burden on the people. Other banks both public and private banks should follow the footsteps of SBI,” says Nayan Raheja, Executive Director, Raheja Developers.