The home loan interest rates may go up – SBI raised its base rate


The home loan interest rates may go up – SBI raised its base rate

The State Bank of India raised its base rate by 10 basis points thereby raising its lending rate and also raised the interest offering on deposits by 0.25-1 percentage point across various maturities.

The other housing finance companies may also hike the interest rates. Home buyers and existing home loan customers may therefore expect for a hike in rates by their bank or housing finance company as they may not be very far from raising their base rates.

For an existing customer, if your floating rate loan at 10.5 per cent has a total outstanding of Rs 20 lakh for 18 years (216 months) then as a result of a hike of 25 basis points, the tenure of your loan will rise by 11 months to 227 months, keeping the EMI constant.  It may be prudent to liquidate some savings (fixed deposits etc) and partly prepay the home loans so as to reduce the impact of any hike in interest rate.

For a new customer, the EMI for a Rs 20 lakh, 20 year floating rate loan if the rates rise from 10.5 to 10.75 per cent, the EMI will go up from Rs 19,967 to Rs 20,304

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