State Bank of India (SBI), the country’s largest lender, is offering repo rate-linked home loans at interest rate starting at 8.05 per cent. The new interest rates, effective from today, are also applicable to existing repo-linked home loans, according to bank’s website- sbi.co.in. A repo rate-linked home loan means that any changes in the key interest rate by the central bank are passed on directly to the customers. As and when there is a change in central bank’s repo rate, SBI’s repo-linked lending rate (RLLR) changes automatically and thus the home loan rate.
SBI has a 2.25 per cent or 225 basis-point mark-up over the repo rate. The Reserve Bank of India’s Monetary Policy Committee (MPC) has cut the repo rate – the key interest rate at which it lends short-term funds to commercial banks – by 35 basis points or 0.35 percentage point to 5.40 per cent on August 7.
As a result, now SBI’s RLLR falls to 7.65 per cent (5.40 per cent + 2.25 per cent). SBI also charges a spread, depending on the borrower’s credit score (RLLR + 40 basis points or RLLR + 55 basis points) for home loans up to Rs. 75 lakh, according to the bank’s portal. The spread increases to RLLR + 95 basis points or RLLR +110 basis points in case of home loans above Rs. 75 lakh.
For borrowers with good a credit score and for loans up to Rs. 75 lakh, SBI charges 8.05 per cent (RLLR of 7.65 per cent + 40 basis points or 0.40 per cent) under this new scheme.
This repo-linked home loans of SBI was introduced in July this year. As of July 1, 2019, its repo-linked lending rate stood at 8 per cent (exclusive of charges).