state Bank of India (SBI) has increased the interest rates of home loan for new customers by 25 basis points i.e. 0.25 percent. These latest growth will mainly affect customers with low credit scores, as the bank has increased its loan rate upper limit. Along with State Bank of India, another government bank-union bank of India has also increased the interest rates of home loan. It is believed that after these two banks, other government banks can also make home loans expensive. Pricing pressure has increased after the Reserve Bank of India cut the repo rate by 1.00 percent this year.
New home loan rates for new customers will be between 7.5% to 8.70%
According to an Economic Times report, during the last fortnight of July, SBI’s home loan rates were between 7.5% to 8.45%. But after this new increase, the new home loan rates for new customers will be between 7.5% to 8.70%. Union Bank of India has raised its interest rates from 7.35% to 7.45% at the end of July. In comparison, private banks like HDFC Bank, ICICI Bank and Axis Bank are currently giving home loans at the initial rates of 7.90%, 8.00% and 8.35% respectively.
Only increased interest rates will apply to new customers
A expert associated with the case told the Economic Times that SBI has changed interest rates based on CIBIL score and external benchmark lending rate (EBLR). It is a low return product for the bank, so it has decided to increase margins on new loans for customers with low credit scores. This change applies only to new customers and will not have any effect on the outstanding loans of ₹ 8 lakh crore. “SBI’s retail loans are the largest part of the home loan in the portfolio.
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