SBI as per the direction of the RBI will switch all its floating rate loan products to external benchmark beginning October 1. The bank has chosen repo rate as its external benchmark to peg all of its retail loan products including home, auto etc. Repo rate is the rate at which RBI lends money to commercial banks and in view of the economic situation and tamed inflation levels, it has been revised lower to 5.4%.
The largest lender has come out with details on interest rate for the new home loan scheme linked to repo rate and it is expected to be pricier than before. This is because the bank has increased the margin or spread that it will levy over and above the repo rate to compute the interest rate payable by borrowers. The effective benchmark rate will be equal to repo rate plus 2.65%. So, with repo rate currently at 5.4%, the bank has fixed its interest rate on loans based on the external benchmark-linked rate (EBR) at 8.05%.
|Customer category||Home loan amount||Interest rate|
|Salaried customers||Upto Rs. 30 lakh||8.2% (implying a premium of 15bps more than EBR)|
|Rs. 30 lakh to Rs. 75 lakh||8.45% (implying a premium of 40bps more than EBR)|
|Above Rs. 75 lakhs||8.55% (implying a premium of 50 bps more than EBR|
For non-salaried customer base, a premium of 15 bps will be charged to the home loan card rates, while the women borrowers will get a rebate of 5 basis points. Customers, who fall in the risk profile category of between 4 and 6, there will be charged an additional 10 bps premium over and above the effective benchmark rate.
In case of a home loan up to Rs. 30 lakh, if the LTV ratio comes to be in the range of 80%-90%, a premium of 10bps will be charged to the external benchmark- linked lending rate. Loan to value ratio is the amount of the property value which the lender can finance.