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 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. With market leader SBI making the move, other lenders are also likely to follow suit.
The new rates came into effect from May 1, as per 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 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 revision by SBI comes just a month after it had reduced home loan rates 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 per cent as against 7.20 per cent on April 1, 2020.