The biggest lender in the country, State Bank of India has already started hiking interest rates on home loans. Being one of major players in the housing finance market, SBI has increased home loan rates despite carrying on with its teaser loan offer.
The bank has increased the duration of its special home loans till April end. In the first year, these loans carry interest of 8% as was offered previously. But it is the rates for the later years have been hiked by the bank. Increasing cost of funds made the bank take this measure.
The bank offered 2 home loan schemes till 31st March viz. The Easy Home Loan (till Rs 50 lakh) and Advantage Home Loan (over Rs 50 lakh). An SBI spokesperson said, ”From April 1, both the schemes have been merged and extended for a month. The rates applicable for new loans sourced from April 1 till April 30 are 8% for the first year, 9% for the second and third years and floating rate at 1.75% below SBAR (SBI’s equivalent of prime lending rate, or PLR) thereafter”.
This implies that the home loan rates for the 2nd and 3rd years have been hiked by 50 basis points. Previously the rate was 8.5% which has now become 9%. From 4th year onwards, the present structure will carry interest rate of 10%.
The bank attributed the reason for this to the change in computation of interest on savings accounts, that has led to increase in the cost of the funds.