The country's largest public lender State Bank of India (SBI) recently hiked the minimum interest rate on home loans by 25 basis points (bps) from 6.70 per cent to 6.95 per cent. The hiked interest rate on SBI home loans came into effect from April 1, 2021.
SBI's hiked interest rate on home loans is likely to prompt other lenders to follow suit soon. It is a sign that home loan interest rates will be hiked further.
It may be noted that the public lender had lowered the minimum interest rate to 6.70 per cent from 6.80 per cent on March 1, 2021. However, it was a limited period offer for interested homebuyers.
The bank has not only increased the minimum interest rate from April but has added a processing fee on all home loans. SBI is expected to charge 0.40 per cent of the loan plus GST -- subject to a minimum of Rs 10,000 and a maximum of Rs 30,000 plus GST -- as a processing fee.
SBI, however, mentioned on its website that for builder tie-up project where individual TIR or title investigation report and valuation is not required, the processing fee will be 0.40 per cent of the loan amount subject to a maximum amount of Rs 10,000 plus GST.
In a scenario where TIR is required, normal charges will be applicable. Earlier, the bank had waived home loan processing fees till March 31, 2021.
Last month, SBI said that its home loan portfolio of Rs 5 lakh crore was the largest, making it a market leader in the segment. Not just SBI but other banks like HDFC Bank, ICICI Bank and Bank of Baroda are also expected to increase home loan interest rates soon.