Mumbai, May 8 (PTI) State Bank of India (SBI) has raised its home loan rates that are linked to repo rate by up to 30 basis points, a move which may be followed by other lenders.

The country’s largest lender has also hiked effective interest rates on personal loans against property by 30 basis points.

The decision to increase margin has been taken amid market indications of increased credit risk for borrowers and realty firms in the wake of coronavirus pandemic, according to a senior official.

With market leader SBI making the move, other lenders are also likely to follow suit.

While SBI has kept the external benchmark-linked lending rate constant at 7.05 per cent, the increase in home loan rates has been done by raising margins by up to 30 basis points across various home loan products.

The new rates came into effect from May 1, as per information available on its website.

SBI has been offering home loan and few other loans including personal loan against property and reverse mortgage since October last year to new borrowers.

In the wake of the pandemic and subsequent nationwide lockdown, there has been disruption in economic activities as well as in income for many individuals and companies.

The senior official at the SBI said spread is the credit risk premium and an increase in spread reflects stress due to COVID-19 impact in the market.

The financial market indicates that there is some increase in risk perception for borrowers and the real estate firms which is getting reflected in the credit risk premium charged by the bank, the official said.

Despite the increase in the spread, SBI continues to provide home loan at the most competitive rate.

The revision by SBI comes just a month after it had reduced home loan rates by 75 basis points.

The bank had last revised its External Benchmark Linked Lending Rate (EBR) and Repo Linked Lending Rate (RLLR) on April 1, 2020, immediately after the RBI announced reduction in repo rate by 75 basis points.

For home loans of up to Rs 75 lakh, SBI has increased the spread by 20 basis points. For home loans up to Rs 30 lakh, the effective rate, which is EBR plus spread, now stands at 7.40 per cent as against 7.20 per cent on April 1, 2020.

The effective rate for home loans above Rs 30 lakh and up to Rs 75 lakh has been increased to 7.65 per cent from earlier rate of 7.45 per cent. For home loans above Rs 75 lakh, the new rate stands at 7.75 per cent as against 7.55 per cent earlier.

The spread under the Maxgain home loan category has been increased by 30 basis points. The effective rate for Maxgain home loans up to Rs 30 lakh has been hiked to 7.75 per cent from 7.45 per cent.

The bank has also increased the spread for its Personal Loan Against Property (P-LAP) by 30 basis points.

The effective rate for P-LAP up to Rs 1 crore has been raised to 9.20 per cent as against 8.90 per cent as on April 1, 2020. For loans above Rs 1 crore and up to 2 crore, the effective rate stands at 9.70 per cent as against 9.40 per cent earlier.