Published on: May 11, 2017 @ 04:24
State Bank of India (SBI), the country’s largest lender in India, on Monday has cut home loan rates by 0.25 per cent from 8.60 per cent to 8.35 per cent per annum. The new rate is applicable on loans of up to Rs 30 lacs and has come into effect from May 9, 2017. With this rate cut, SBI’s offering is the lowest in the market.
SBI’s Home Loans rates of up to Rs 30 lakh will cost women 8.35% and others 8.4%. The new rate reduction of 25 bps for women is for the salaried borrowers and for the non-salaried, it will be 20 bps rate cut (100bps = 1 percentage point). Similarly, the new rate reduction will be applicable to male salaried and non-salaried borrowers.
For home loans over Rs 30 lakh, SBI has cut the rate to 8.50% from 8.60%. Women borrowing more than Rs 30 lakh will need to pay an interest rate of 8.50% and others 8.55%. On loans more than Rs 75 lakh, the rate remains unchanged at 8.60%.
Further, an eligible home loan customer can also avail of an interest subsidy under the Pradhan Mantri Awas Yojna scheme (PMAY). Under the PMAY, home loans of up to Rs 9 lakh and up to Rs 12 lakh receive interest subsidy of 4 per cent and 3 per cent respectively, while in rural areas loans up to Rs 2 lakh will get an interest subvention of 3 per cent. Therefore, the value of the subsidy amounts to Rs 2.67 lakh for an eligible borrower.
“This limited period offer is to give a boost to affordable housing. With this reduction we expect the fence sitters to take a decision,” said Rajnish Kumar, Managing Director, SBI. Announcing the rate cut, SBI said that this was in keeping with the Prime Minister’s vision of providing “Housing for All” by 2022.
Rival lenders are expected to respond with further rate cuts as other big lenders including ICICI Bank and Axis Bank offer home loans at 8.65%. A new entrant in the home loan market is DBS Bank which is now offering retail borrowers home loans at 8.4%. So far, Bank of Baroda’s home loan offer was the most attractive at an interest rate of 8.35%.
Rajnish Kumar, MD, SBI said, “We have seen a steep hike in the Home Loan enquiries recently and reduction in rates will further help millions of home buyers fulfill their dream of owning a home. Individuals can apply for home loans through multiple channels.” He said that he expected some acceleration in home loan growth as the bank had recently merged its five associate banks with itself, widening its reach.
This is a welcome step by SBI for those home buyers who have put off their home buying decision in anticipation of further price correction in real estate sector as SBI has made home loans more cheaper for new customers.