State Bank of India (SBI) home loan EMIs are set to increase as the bank has hiked its benchmark lending rates by up to 50 basis points (or 0.5%). The move from SBI comes after the Reserve Bank of India increased its benchmark lending rate by 50 basis points to control inflation. Marginal Cost of Funds-Based Lending Rate (MCLR) has increased by 20 basis points across all tenures, while External Benchmark Based Lending Rate (EBLR) and Repo-Linked Lending Rate (RLLR) have both increased by 50 basis points.
According to the SBI website, the new rates are applicable as of August 15. SBI’s RLLR grew by 50 basis points to 7.65 per cent, and its EBLR increased to 8.05 per cent. When granting any type of loan, including mortgage and vehicle loans, banks add Credit Risk Premium (CRP) over the EBLR and RLLR.
With the modification, the one-year MCLR has climbed from 7.50 to 7.70 per cent, 7.90 to 7.90 per cent, and 8% to 8% for two and three years, respectively. The majority of the loans are based on the MCLR rate for one year. Due to the rise in interest rates, borrowers who hold loans with MCLR, EBLR, or RLLR will see an increase in their monthly payments.
All banks, including SBI, switched to interest rates linked to external benchmarks like the RBI repo rate or Treasury Bill yield starting on October 1, 2019. The transmission of monetary policy by banks has become more popular as a result.
