SBI cuts home loan rate to 8.35%, in big boost to affordable housing
HOME A LOAN Customers can also avail an interest subsidy of ₹2.67 L under govt’s housing scheme
India’s largest lender State Bank of India (SBI) on Monday announced a reduction in home loan rates by 25 basis points to 8.35%. This move will provide a big thrust to affordable housing segment and the new rates will be effective from Tuesday for the new borrowers.
While 25 basis point cut is valid for loans up to ₹30 lakh, the bank has cut 10 basis points for loans from ₹30 lakh to ₹75 lakh.
Eligible home loan customers can also avail of an interest subsidy of ₹2.67 lakh under the Pradhan Mantri Awas Yojana scheme. According to a statement issued by the bank, special offerings will be given for construction finance, to the builders involved in affordable housing projects.
”Under MCLR loan rates are reset after every one year. 45% of new borrowers will benefit from the latest rate cut,” said MG Vaijinath, chief general manager, real estate and housing business, State Bank of India.
In January, SBI had cut its marginal cost of funds-based lending rate (MCLR) across all tenors by 90 basis points (bps), the steepest cut in several years.
MCLR is the benchmark rate based on weightage average of the cost at which banks price their loan.
With around 26% market share, SBI is also the biggest player in the home loan segment.
HDFC, the second-largest player in the space, offers loans at 8.65% to women for loans up to ₹75 lakh and 8.7% for others. Similar is the minimum rate being offered by the largest private lender, ICICI Bank.
As for male borrowers, the state-owned bank said the limited period offer is valid till July 31 and the new rate for the salaried will be lower by 20 basis points at 8.40%.
“This is a huge saving for the borrower as the 25 basis points reduction translates into a saving of ₹530 per month on EMI,” SBI managing director for national banking Rajnish Kumar said.
Explaining the reason behind the move, which makes its offering the lowest in the industry, Kumar said the bank has seen a hike in home loan enquiries of late and reduction in rates will further help millions of buyers fulfil their dream of owning a home. Also, the bank expects that the new rates will 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. “A lot of customers are undecided on a new home as rates of the market as well as finance have been high for too long. That should hopefully change now.”
With a home loan book of ₹2.23 lakh crore, SBI leads the home mortgage segment with 25-26% market share.
Kumar, however, said the new offer may not push up its market share significantly as 45% of its ₹2.23 lakh crore home loan book is already under the ₹30 lakh bracket and the rest of the credit industry is also very aggressive.
SBI is also giving a special offer for construction finance to builders for affordable housing projects. “This will give a dual push both for construction finance and also for home finance for affordable homes, but the bank did not quantify the reduction,” Kumar said.
Asked about the delinquency levels in the home loan segment, he said the highest is among the rural borrowers with a ticket size of under ₹4 lakh, but for other segments, he claimed that SBI has the lowest bad loans.
The SBI stock closed 0.91% higher on the BSE on Monday, against a 0.23% rise in the Sensex.