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After HDFC and ICICI Bank, the country's largest bank, State Bank of India (SBI) has hiked home loan rates by 50 basis points and interest on deposits by 25-50 basis points.

SBI has raised both floating and fixed rate home loans and introduced a new deposit slab to attract deposits for five years and above. In the floating rate category, interest on loans up to five years has been raised to 8% from 7.50%, up to 15 years to 8.5% (8%) and above 15 years to 8.75% (8.25%).

In the fixed rate category, loans up to five years will now cost 8.50% (8%), up to 15 years 9% (8.75%) and above 15 years 9.25% (9%).

According to a statement issued by SBI, the revised interest rates shall be applicable only to new housing loans whose first disbursal is on or after November 29 '04. Existing home loans customers - both floating and fixed loans customers - will continue to enjoy the old rates.

This is primarily because SBI has not revised the benchmark rate - State Bank Advance Rate - pegged at 10.5%. If SBI revises its prime lending rate, lending rates for the customer would also rise.

This is the second round of rate revision by SBI for fixed rate home loans this fiscal. End August '04, SBI had raised the fixed rate loan by 0.25-50%.

During the same time, SBI had given its customers a one-time option to switch from floating rate to fixed rate loans by paying a one-time fee of 2.75% (which is inclusive of service tax and education cess) of the outstanding loan amount.

The rise in yields on government securities and tightening liquidity due to a credit pick-up have prompted banks to raise their lending and deposit rates. Several banks like Bank of India, Bank of Baroda, ICICI Bank, Vijaya Bank have already raised deposit rates.

SBI has introduced a new slab for deposits where it would offer 6.25% on deposits of five years and above.

For the shortest tenure - upto 14 days, the bank will offer 3%. Short term deposits have been revised upward by 0.25%. Deposit rate for 15-45 days is pegged at 4%, 46-179 days 4.50% and 180 days to less than one year at 5%.

For medium and long term, rates have been hiked by 50 basis points.

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