SBI slashes home loan rates, here's a comparison of home loan rates of all major banks in India

An SBI branch remains closed in Guwahati on Dec 21, 2018. Banking services across India were affected on Friday as over 3.2 lakh bank officers struck work demanding unconditional mandate for the 11th bi-partite wage revision talks. (Photo: IANS)
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SBI has recently revised the interest rates on its loans which work out to the advantage of the borrowers from the largest money lender of the country. The bank’s shift to floating rate based home loans follows its obligation to comply with the latest regulatory guidelines from the RBI. Earlier this year, the Reserve Bank of India has instructed all the banks to link some of their loans to the external benchmark so that the rate cuts can reach the customers quickly.

SBI’s revised home loan interest rates in comparison with those of other banks

SBI 8.15% - 8.80% p.a.
HDFC Ltd 8.25% - 9.60% p.a.
ICICI Bank 8.60% - 9.40% p.a.
Axis Bank 8.55% - 9.40% p.a.
PNB Housing Finance Ltd. 7.95% - 8.70% p.a.
Karnataka Bank 8.65% - 10.25% p.a.
United Bank of India 8.00%- 8.15% p.a.
Vijaya Bank 8.10% - 9.10% p.a.
UCO Bank 8.40% to 8.65% p.a.
Citi Bank 8.05% - 9.60% p.a.
HSBC Bank 8.55% - 8.65% p.a.
Canara Bank 8.05% - 10.05% p.a.

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Floating based loans are linked to repo rate

SBI has announced that the floating based loans given away to micro, small and medium enterprises, retail and housing segments will henceforth be linked to the repo rate, which will serve as the external benchmark. Repo rate can be described as the key interest rate applied by the Reserve Bank of India on the short-term funds given to the commercial banks in the country.

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What does the revised interest rate system mean?

Linking the loan interest rates to the repo rates will mean that repo rate will be considered as the external benchmark in a way that any key interest charged by the RBI will quickly passed on to the customers. The SBI website says that the bank will have a 2.65 percent markup over the repo rate. Earlier in August, the RBI had cut the repo rate by 35 points to 5.40 percent. Hence the external benchmark rate of the SBI will work out to 8.05 percent as per the SBI’s new regulation.

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Interest rates on term loans

In cases of term loans for the salaried class up to Rs 30 lakhs, SBI said a premium of 15 points will be added on top of the external benchmark (EBR) rate. Hence the revised interest rate of term loans in this case will work out to 8.20 percent (8.05 percent plus 0.15 percent) as per the bank’s new interest rate system.

What does the revised loan rate system bring the borrowers?

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SBI has now decided to switch over to floating interest rates by linking the loan rates on its loans to the repo rates. This will mean that the customers will be billed based on the latest repo rates. Whenever the repo rates fall, the customers get to save. Very rarely when the repo rates go up, the borrowers will have to bear higher bills on their borrowings. However, in most cases, the floating loan interest rates appear to be much cheaper than the fixed home loan interest rates. Know that the loan rates will also be determined by factors like your income, credit score, property’s location, loan type, tenure of the loan, loan amount, type of interest rate and the promo offers in vogue.
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