SBI Home Loan EMIs to Increase: Home loan borrowers of India’s largest public sector bank State Bank of India, or SBI, are set to feel a pinch in their pockets as the lender has announced new rates under which their home loan EMIs will be hiked from tomorrow. This is because the SBI has increased its external benchmark lending rate (EBLR) on home loans by 40 basis points to 7.05 per cent. The lender has also announced that the Repo-Linked Lending Rate (RLLR) would in turn be revised to 6.65 per cent plus CRP. According to the official website of the State Bank of India, the new rates will come into effect from June 1, Wednesday.
The latest decision of SBI to hike EBLR rates has come weeks after the Reserve Bank of India decided to increase repo rates by 40 basis points in an off cycle monetary policy committee meet in the beginning of this month. This was done to tame the rising inflation in the country. The RBI is also likely to hike its key interest rates again in the next MPC meet scheduled between June 6 to June 8.
Latest SBI Home Loan Rate Hike, With Effect from June 01
EBR (with effect from June 1) is 7.05 per cent; EBLR = 7.05 per cent + CRP
RLLR (with effect from June 1) would be 6.65 per cent + CRP.
Before this, SBI EBLR rate was fixed at 6.65 per cent, while the RLLR was 6.25 per cent.
As per SBI, “External Benchmark based Lending Rate (EBLR) = External Benchmark Rate (EBR) + Credit Risk Premium (CRP)”. It is customary for banks to add a Credit Risk Premium (CRP) over the EBLR and RLLR while providing any loans to borrowers, including home loans and car loans.
What is External Benchmark Lending Rate or EBLR?
As per the SBI website, “EBLR stands for External Benchmark Lending Rate. SBI has adopted Repo Rate as the external benchmark to link its floating rate home loans with effect from 01.10.2019.” The EBLR rate fluctuates with the Reserve Bank’s benchmark interest rate, and remains unchanged outside of it.
EBLR is a new interest rate model, whereby floating rate home loans will have interest rates linked to External Benchmark. On the other hand, the Repo Linked Loan Rate (RLLR) is based on and related to the RBI’s repo rate, which is adjusted on a regular basis. The RLLR is adjusted once the repo rate is hiked or lowered. This varies from bank to bank.
Is EBLR a new Home Loan Product? What are the Charges to Migrate to This Structure?
As per the SBI website, EBLR is not a new home loan product. “It is a new interest rate structure. All floating rate home loans will have interest rates linked to External Benchmark,” says the website. Moreover, SBI charges a one-time switch over fee of Rs 1000 plus taxes to migrate to the new home loan structure.