Home loans to get costlier as SBI hikes loan rates

SBI has increased its benchmark rate against which all home loans are priced.

0

Mumbai: Soon after HDFC Bank increased its marginal cost of funds based lending rate (MCLR), effective from December 7, the State Bank of India today hiked its MCLR, BPLR, and the base rate w.e.f. December 10, 2018.

SBI has increased its MCLR across all tenors, although marginally, by 5 bps. For instance, the bank has hiked its overnight and one-month MCLR from 8.15 percent to 8.20 percent, while three-month MCLR has been raised to 8.25 percent from 8.20 percent earlier. Similarly, six-month MCLR has been increased to 8.40 percent from 8.35 percent and one-year MCLR to 8.55 percent from 8.50 percent. Two year and three-year MCLR now stands at 8.65 percent and 8.75 percent as against 8.60 percent and 8.70 percent, respectively, earlier. This means that all types of loans – ranging from auto loan and personal loan to home loan – will now become a bit costlier.

Talking about the impact on borrowers of the hike in lending rates, Rahul Jain, Head-Personal Wealth Advisory, Edelweiss, says, “As banks have started raising their marginal cost-based lending rates (MCLR), it will have a direct impact on borrowers as the interest rates on loans will increase. For the existing borrowers, the increase in EMI will be felt when the reset date of the loan arrives. On the reset date, the future EMIs will be calculated based on the MCLR effective on that date,”

Marginal Cost of Funds based Lending Rate (MCLR) is the minimum interest rate, below which a bank is not permitted to lend, barring a few exceptional cases as permitted by the Reserve Bank of India (RBI).

Benchmark Prime Lending Rate (BPLR) is the rate at which commercial banks charge their customers who are most creditworthy. According to the Reserve Bank of India (RBI), banks can fix the BPLR with the approval of their Boards.

Basis point (BPS) refer to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001), and is used to denote the percentage change in a financial instrument.

Also Read: New Hyundai Santa Fe Score 5 Stars In Euro NCAP Rating

Leave A Reply

Your email address will not be published.