mumbai state bank of india sbi the largest bank in india and one of the leading players in the housing finance market has raised interest rates on home loans although the bank will continue with its 8 teaser rate which the sbi had introduced more than a year ago for the first year it has increased rates for the subsequent years effective april 1 the hike in home loan rates by sbi was triggered by the recent increase in its cost of fundstill march 31 sbi had two schemes the easy home loan up to rs 50 lakh and advantage home loan above rs 50 lakh from april 1 both the schemes have been merged and extended for a month an sbi spokesperson confirmed to toi the rates applicable for new loans sourced from april 1 till april 30 are 8 for the first year 9 for the second and third years and floating rate at 175 below sbar sbis equivalent of prime lending rate or plr thereafter the spokesperson addedso in effect the home loan rates for the second and the third years have gone up by 50 basis points 100 basis points1 from 85 earlier to 9 now while fourth year onwards at the current structure the interest rate will be at 10 per annum since currently sbar is at 1175 earlier from the fourth year onward the floating rate was at 275 below the sbar and the effective rate was 9under the new rate structure assuming a 10 rate from the fourth year on a 20year loan of rs 30 lakh a customer would have to shell out about rs 39 lakh over the tenor of the loan thus the effective rate that the customer would be paying over the 20year period is 95explaining the rationale for hiking rates on home loans the sbi spokesperson said it mainly reflected the increased cost of funds from april 1 stemming from the new methodology for paying interest in savings bank accounts on daily balances in april 2009 reserve bank of india rbi had mandated all the banks in india to move to a new methodology of calculating interest rates on savings bank accounts that would add interest on a daily basis this is a significant departure from the earlier practice of calculating interest rate on minimum balance after the tenth of every monthwith state bank of india the countrys largest bank hiking housing loan rates industry players are almost sure that the interest rates have bottomed out in the current cycle