SBI Home Loan Interest Rates: India's largest PSU lender, State Bank of India (SBI) has reduced its external benchmark lending rate by 25 bps on home loans, following the RBI's latest rate cut of 25 bps in repo rate which was for the first in five years. SBI including all scheduled commercial banks have linked their lending rates on various loans with repo rates.
SBI Home Loan Interest Rates:
With effect from February 15, 2025, for all home loans linked to the external benchmark rate (EBR), the new prevailing EBR is 8.90%, which is reduced by 25 basis points from the previous EBR of 9.15%.
External Benchmark Lending Rate (EBLR) = 8.90%, which is a mixture of the RBI repo rate of 6.25% and the spread of 2.65%.
That being said, here are the new rates for SBI home loans:
Regular Home Loan Rates: 8.25% to 9.20%
Home Loan Maxgain Rates: 8.45% to 9.40%.
Tribal Plus Home Loan Rates: 8.35% to 9.30%.
Top Up Home Loan Rates: 8.55% to 11.05%
Top Up (OD) Home Loan Rates: 8.75% to 9.70%.
Loan Against Property (P-LAP): 9.75% to 11.05%.
Reverse Mortgage Loan (RML): 11.30%.
YONO Insta Home Top Up Home Loan: 9.10%.
It needs to be noted that SBI home loan rates are based on the CIBIL score of borrowers.
In its terms of conditions for home loans, SBI announced the loan-to-value (LTV):
- Up to Rs 30 lakh: 90% LTV ratio - Above Rs 30 lakh and up to Rs 75 lakh: 80% LTV ratio - Above Rs 75 lakh: 75% LTV ratio.
For the floating interest rate, SBI's terms and conditions said, "interest on the loan will be charged at a fixed spread with EBLR linked RBI REPO rate on a daily reducing balance basis at monthly rests. The interest rate will be reset with the change in benchmark rate (REPO) from time to time, on the date as decided by the Bank. The Bank has the option to reduce or increase the EMI or extend the repayment period or both consequent upon revision in interest rate."
The loan is to be repaid in Equated Monthly Installments over the tenure of the loan. The repayment instalment commences from a date specified in the sanction letter. The liability to the bank will be extinguished only when the outstanding in the loan account becomes Nil, on payment of the residual amount, if any, it added.
With the latest reduction in home loan rates, EMIs will get cheaper for borrowers on floating rates.
SBI's latest move comes after RBI cut repo rate by 25 bps to 6.25%, for the first time since May 2022.
How Does Repo Rate Impact Home Loan EMIs?
When a homebuyer takes loans from banks or other financial institutions, they are charged with a certain rate of interest. This is called as cost of credit. The borrowers are required to repay the loan amount to banks including the amount of interest which is called EMIs.
EMIs stand for 'Equated Monthly Installments' which is a breakup of loan principal amount + interest rate on that loan. EMIs are obligatory to be paid every month, depending upon the due date assigned by banks.
In a similar pattern, banks and financial institutions borrow money from RBI by selling their government securities or other bonds. Banks do this to maintain adequate liquidity. The repo rate is just like the rate of interest, that banks pay to RBI for the money they borrowed.
When the repo rate is high, the cost of credit for banks is high. And hence, they pass on that impact to end consumers such as borrowers. In simple words, if a repo rate is high, banks increase lending rates. But when the repo rate is cut, the cost of credit is cheaper for banks and hence they reduce the lending rates that they offer to borrowers on home loans, personal loans, car loans, education loans and more.
Also, banks have shifted to repo-linked lending rate (RLLR) since October 2019, replacing the old benchmark Marginal Cost of Fund Based Lending Rate (MCLR). The RLLR benchmark means that banks cannot lend term loans below this rate.
Calculation of RLLR = Repo Rate + Spread
Hence, a repo rate cut comes as a positive factor for home buyers.
Click it and Unblock the Notifications
Sign in with Google