India’s largest bank State bank of India on Monday slashed the lending rates for home loan interest rate to 8.35 percent, from its existing 8.6 percent. The other home loan rates come at HDFC’s 8.65 to ICICI’s 8.7 percent.
The SBI move, effective from Tuesday May 9, 2017, comes close on the heels of a new home scheme launched by the government to provide interest subsidy of Rs.2.67 lakh per annum on loans under Rs 30 lakh.
Announcing the rate cut, SBI Managing Director Rajnish Kumar said the 25 bps reduction is applicable to new women borrowers who are salaried, while for the non-salaried women borrowers will get a reduction of 20 bps, without explaining the rationale behind the discrimination.
“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.
SBI is expecting to attract the fence-sitting borrowers to go in for a loan now. “This is a giant leap to give a fillip to the affordable housing segment keeping the government vision of providing housing for all by 2022,” Kumar said.
SBI’s home loans amount to Rs.2.23 trillion, and its share of the home mortgage segment is about 25 percent. Since 45 percent of its Rs 2.23 trillion home loan book is under the Rs.30 lakh bracket, the bank is giving special offer to builders for affordable housing projects, he said.
However, the sore point is the delinquency levels are high among the rural borrowers at a ticket size of under Rs 4 lakh, he said.