Starting July 1, consumers would have the option to take SBI home loans pegged to the central bank repo rate, the lender said in a statement a day after the cost of funds was set at the lowest since 2010. Friday’s move follows the Mumbai-based bank’s March decision to link its savings bank rate and short-term lending rates to the repo.
The bank will continue to offer home-loan products linked to the marginal cost of lending rate (MCLR), but customers can opt for a repo linked home loan rate, said PK Gupta, managing director in charge of retail banking at SBI.
“This is a different product. It is linked to repo and at a larger tenure than the normal home loan. The rate for a Rs 75-lakh home loan comes to 8.40%, compared with 8.55% on the existing home loan,” Gupta said. “However, the tenure under the new product will be more and can go up to 35 years, compared with 30 years we offer now because customers have to pay a 3% outstanding amount plus interest every year.”
Existing borrowers can shift to repo rate-linked product by paying a 0.25% charge, Gupta said.