SBI CUTS HOME LOAN RATE TO 8.35% FOR WOMEN BORROWERS

Upping the ante in the housing loan segment, the State Bank of India (SBI) on Monday reduced its affordable home loan rate by up to 25 basis points (bps), offering a rate of 8.35 per cent to new women borrowers. With around a 26 per cent market share, the nation’s largest lender is also the biggest player in the home loan segment.

State Bank of India (SBI) reduced its interest rate by 25 basis points (bps) on home loans up to ~30 lakh, to 8.35 per cent, from Tuesday for new women borrowers. For male borrowers, the cut is by 20 bps, to 8.4 per cent.

With around 26 per cent market share, the nation's largest lender is also the biggest in the home loan segment (their loan book here is ~2.23 lakh crore).

And, even at the earlier rates, SBI offered the lowest. Housing Development Finance Corporation, second largest in the space, offers loans at 8.65 per cent to women for loans up to ~75 lakh and 8.7 per cent for others. So does ICICI Bank, the largest private lender.

The interest rates for customers availing a home loan above ~30 lakh have also been reduced by 10 bps. Over and above the rate benefit, an eligible customer may also avail of an interest subsidy of ~2.67 lakh under the Pradhan Mantri Awas Yojana.

Rajnish Kumar, managing director, said the new offer might not push up its market share significantly, as 45 per cent of its home loan book was already under the ~30 lakh bracket, and the rest of the credit industry wa very aggressive.

SBI is also giving a special offer for construction finance to builders for affordable housing projects.

Asked about delinquency levels in the segment, Kumar said the highest was among rural borrowers with a ticket size of under ~4 lakh. Rating agency CRISIL in a report on affordable housing finance, said growth in overall advances was expected to remain healthy at a 17 per cent compounded annual rate over the next three years. These are expected to almost double to ~12,70,000 crore by 2019-20, from ~670,000 crore as on end-March 2016, it said. Competition has intensified in the traditional home loans space, particularly from banks, which are being compelled by subdued demand and asset quality pressures in the corporate sector to focus on retail (to non-wealthy individuals) lending.

Banks· home loan growth is expected to outpace that of housing finance companies for the first time in five years. The competition could reduce as corporate credit demand picks up gradually, CRISIL added.