Published: Thu, May 11, 2017
Economy | By Melissa Porter

SBI cuts low-priced home loan rates by 0.25% to 8.35%

SBI cuts low-priced home loan rates by 0.25% to 8.35%

The new rate is effective from May 9.

After the revision, the bank will offer an interest rate of 8.35 per cent to women and 8.4 per cent to other borrowers for loans up to Rs 30 lakh. The rate cut will help only new borrowers since the existing borrowers are locked into one-year fixed rate on interest as per the rule of arriving at lending rates.

With a home loan book of Rs2,23,000 crore, SBI leads the segment with 25-26 per cent market share.

The State Bank, India's largest lender, today cut its interest rate for home loans up to Rs 30 lakh by 0.25 per cent to 8.35, while those above Rs 30 lakh saw a cut of 0.10 per cent.

The bank will now charge salaried borrowers 8.35 per cent on home loans up to Rs30 lakh as against 8.60 per cent at present. The new offer may not push up its market share significantly as 45 per cent of its home loan book is already under the Rs 30-lakh bracket and the rest of the credit industry is also very aggressive. For non-salaried borrowers, the reduction will be of 20-bps. For senior citizens, the term deposit rate for the similar period has been reduced from 7.25 per cent to 6.75 per cent.

He said that individuals can now apply for home loans through multiple channels.

For builders setting up affordable projects under the central scheme, the bank has come out with rate concessions. "This will give a dual push both for construction finance and also for home finance for affordable homes", SBI said.

"This is a huge saving for the borrower as the 25 bps reduction translates into a saving of Rs 530 per month on EMI", he said.

Nandu Belani, president of real estate body Credai, expects the rate to go further down. The move, however, is likely to benefit housing finance companies (HFCs) rather than banks, analysts say.

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