SBI Increases Home Loan Rates By 5 Bps

The State Bank of India (SBI) has increased its Marginal Cost of Funds-based Lending Rate (MCLR) by 5 basis points (BPS), effective from today (November 15). The decision will increase the borrowing cost for loans having a tenor of three months, six months, and one year.

What are the new rates?

Following the hike, MCLR rose to 8.55% from the previous 8.50%, while the six-month rate went up from 8.85% to 8.90%. The one-year MCLR currently stands at 9%.

Impact on home loan and borrowers

A rise in MCLR indicates that home loans and various other loans will get more expensive. Monthly installments will become costlier for individuals whose loans are attached to one-year MCLR. Other banks are also set to follow the same approach.

The recent increase is in line with RBI’s measures to keep inflation in check, which can lead to surge in borrowing costs.

Impact on personal loans and vehicle loans

A change in SBI’s MCLR also impacts loans linked to one-year MCLR, which includes auto loans. The interest rate on SBI loans depends on various factors including borrower’s credit score and CIBIL score. Personal loans also get costlier as they are tied to bank’s two-year MCLR.

What is MCLR?

Marginal Cost of Funds-based Lending Rate or MCLR is the minimum interest rate that banks can charge from their customers. Banks calculate MCLR based on various factors ranging across deposit costs, operating expenses and profit margin.