Business / SBI hikes minimum interest rate on home loans to 6.95%

New Delhi: State Bank of India, the country's biggest lender, has increased home loan rates starting from April 1, 2021, in a sign that interest rate cycle on home loans may head north from now. SBI has hiked minimum interest rate on home loans by 25 basis points or 0.25% to 6.95% from 6.70% earlier.

Last month, the public sector bank had announced a special offer valid till March 31, wherein home loans were available starting from 6.70%. This indicates that the best rate for home loans has increased by 25 basis points. Following this move from SBI, other lenders may soon hike interest rates on their home loans.  

As mentioned on SBI's website, its home loans are available at 40bps above the external benchmark-linked rate (EBLR). The EBLR, which is linked to the RBI’s repo rate, is currently 6.65%, which would mean that home loans are available at 7%. However, loan proposals that have a woman as one of the applicants are entitled to a 5bps discount, which makes it 6.95%.

The lender will also charge a consolidated processing fee, which will be 0.40% of the loan amount plus applicable GST, subject to a minimum of Rs 10,000 and maximum of Rs 30,000 plus GST.

However, for builder tie-up projects where individual TIR (title investigation report) and valuation is not required processing fee will be 0.40% of loan amount subject to a maximum amount of Rs 10,000 plus GST. But in case TIR and valuation is required, then normal charge will be applicable., SBI mentioned on its website.

Earlier SBI had waived home loan processing fees till March 31, 2021.

In February, SBI had said that its home loan portfolio of Rs 5 lakh crore was the largest among various businesses of the bank and that it was a market leader when it came to individual home loans. The lender had said that it would grow its portfolio by speeding up the turnaround time for loan applications.