New Home Loan Rates Explained Here

Increase in EMI of SBI home loans: Borrowers of home loans from India’s largest public sector bank, the State Bank of India, or SBI, are expected to feel a pinch in their pockets as the lender announced new rates under which their home loan EMIs will be increased starting tomorrow. Indeed, the SBI increased its external benchmark lending rate (EBLR) on home loans by 40 basis points to 7.05%. The lender also announced that the Repo-Linked Lending Rate (RLLR) would in turn be revised to 6.65% 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 SBI’s latest move to hike EBLR rates came weeks after the Reserve Bank of India decided to hike repo rates by 40 basis points at an off-cycle monetary policy committee meeting earlier this month. month. This was done to bring the rising inflation in the country under control. The RBI is also expected to raise its key rates again at the next MPC meeting scheduled for June 6-8.

Latest increase in SBI mortgage rates, with effect from 01 June

EBR (effective June 1) is 7.05%; EBLR = 7.05% + CRP

The RLLR (effective June 1) would be 6.65% + CRP.

Previously, the SBI EBLR rate was set at 6.65%, while the RLLR rate was 6.25%.

According to SBI, “External Benchmark Lending Rate (EBLR) = External Benchmark Rate (EBR) + Credit Risk Premium (CRP)”. It is customary for banks to add a credit risk premium (CRP) over EBLR and RLLR while granting loans to borrowers, including home loans and car loans.

What is the External Benchmark Lending Rate or EBLR?

According to the SBI website, “EBLR stands for External Benchmark Lending Rate. SBI has adopted the Repo Rate as an external benchmark to link its variable rate mortgages 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 variable rate mortgages will have interest rates tied to the external benchmark. On the other hand, the Repo Linked Loan Rate (RLLR) is based on and linked to the RBI repo rate, which is adjusted regularly. The RLLR is adjusted once the repo rate is raised or lowered. This varies from bank to bank.

Is EBLR a new mortgage product? What are the costs for migrating to this structure?

According to the SBI website, EBLR is not a new home loan product. “It’s a new interest rate structure. All variable rate home loans will have interest rates tied to the external benchmark,” the website states. Additionally, SBI charges a one-time transfer fee of Rs 1000 plus tax to migrate to the new home loan structure.

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