SBI to increase home loan EMIs

New Delhi: State Bank of India (SBI) is now set to hike the equated monthly instalments (EMIs) on floating rate home loans by around 10 per cent.

The bank has taken the decision for the first time after it raised interest rates over the past one year. The bank has also decided to extend the loan repayment period up to 25 years as the interest rates on housing loans are up by 2 per cent as against last year’s.

“So far the bank has not increased the EMIs. However, the bank has no option now but to increase the EMIs,” Yogesh Agarwal, managing director SBI was quoted as saying.

“The general expectation is once the EMIs increases, the repayment capacity of the borrowers will come down. We expect a small increase in the NPA (non-performing asset) level,” said Agarwal.

According to OP Bhatt, chairman, SBI, “There has already been a slowdown in the growth of housing loans. For another month or two the slowdown is expected to continue.”

SBI had reported a slowdown in home loan growth to around 18 per cent in 2006-07 from the 25 per cent level a year earlier.