SBI Increases Base Rate, Home Loans to Get Costlier
Jun 12, 2018 Home Loan
Experts’ suggested that perhaps this was the best time to buy property with market slowdown, low property prices, low home loan interest rates, developers offering attractive deals to earn money to come out of their financial crunch. But recently in March one private bank and two public banks increase their marginal cost of funds-based lending (MCLR) rates. And this has somehow disrupted this ideal situation of the property market.
ICICI bank has hiked it one year MCLR rate from 8.20 percent to 8.30 percent. State Bank of India (SBI) has increased its one-year MCLR rate from 7.95 percent to 8.15 percent whereas Punjab National Bank (PNB) has increased its one-year MCLR rate to 8.30 percent from 8.15 percent. The increased rates have come into effect on March 1. Banks usually provide home loans on one, two and three-year MCLR rates.
Recently SBI has increased the base rate as well as benchmark prime lending rate (BPLR) by five basis point. The financial institution has hiked its base rate to 8.70 percent from 8.65 percent while the BPLR has been raised to 13.45 percent from 13.40 percent, which means that the cost of the loan for the existing loan borrowers who are yet to switch to the new lending benchmark is going to increase. For the first time five years the bank has made some changes in its base rate. The last increased was implemented in 2013.
ICICI bank has hiked it one year MCLR rate from 8.20 percent to 8.30 percent. State Bank of India (SBI) has increased its one-year MCLR rate from 7.95 percent to 8.15 percent whereas Punjab National Bank (PNB) has increased its one-year MCLR rate to 8.30 percent from 8.15 percent. The increased rates have come into effect on March 1. Banks usually provide home loans on one, two and three-year MCLR rates.
Recently SBI has increased the base rate as well as benchmark prime lending rate (BPLR) by five basis point. The financial institution has hiked its base rate to 8.70 percent from 8.65 percent while the BPLR has been raised to 13.45 percent from 13.40 percent, which means that the cost of the loan for the existing loan borrowers who are yet to switch to the new lending benchmark is going to increase. For the first time five years the bank has made some changes in its base rate. The last increased was implemented in 2013.
Now let’s understand how this move will impact the borrowers.
The increase in rates would definitely be going to impact borrower’s equated-monthly-instalment (EMI) that he or she has to pay every month. For instance, if a borrower has taken a loan of Rs 50 lakh from SBI at a rate of 8.30 percent for a period of 20 years, then the borrower would pay an EMI of Rs 42,760. But a hike in interest rates of 25 basis points would increase the EMI to Rs 43,550.
Will the rates increase further?
However, with the hike in rates by the banks, experts are in the view that this increased rate might put an end to the era of low home loan rates, while some experts suggest that there might not be any increase in rates in near future. Moreover, industry experts are expecting that the Reserve Bank of India (RBI) will continue to maintain its status quo in its bi-monthly review.
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