Home loan rates slashed to a six year low by SBI

Indian bank announces festive rate cut

Business & Politics

News - Biz@India

November 2, 2016

/ By / Kolkata

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Home loans offered by SBI at lower interest rate this season.

Home loans offered by SBI at lower interest rate this season.

As part of a festive scheme and general interest rate reduction, the State Bank of India (SBI) has announced home loan rates at 9.10 pc for women and 9.15 pc for others, making it the lowest rate in six years.

SBI slashed home loan rates to 9.10 pc per annum for women and/or women co-applicants and 9.15 for others, from previous rates of 9.25 pc and 9.30 pc respectively. The rate cut followed actions taken by the bank last week when it reduced benchmark rates by 15 basis points. Rates were slashed by 0.15 pc for home loans amounting to less than approximately EUR 101,269. “SBI Home Loans, which are cheapest in the market, provides an excellent opportunity for both, new Home Buyers as well as those who wish to switch over their home loan to SBI to save on EMI,” stated a press release by the bank.

The move has also been termed a festive offer as it can be availed for home loans taken and sanctioned between November 1 and December 31. Adding to the offer, the processing fee on its approved projects and balance transfer of home loans has been waived off for the said period. This reduction means that the home loans offered by SBI will be the cheapest available, lower than private banks like ICICI Bank and HDFC Bank.

Currently, sluggish growth is being observed by the banking sector in loans. SBI’s rate cut comes as an attempt to increase its loan growth. Offering tough competition with such low rates, SBI is looking to capture a greater market share. The announcement of the new festive offer has come at a season that is considered to be extremely busy in the second half of the fiscal, with demand for loans shooting up.Even with a negative trend in corporate loans, overall bank credit has shot by 1.6 pc in the financial year, as of mid-October, attributed to home loans which are growing at 18 pc.

Keeping guidelines in mind

The Reserve Bank of India has reduced repo rates amounting to 175 basis points this year itself. This includes when it had announced earlier in October about cutting repo rates. However, schemes and offerings of banks on a large scale have not seen differences. Banks have reportedly reduced their base rates by only 60 basis points. With the new move by SBI though, some observers have noted that banks are finally allowing borrowers to reap the benefits of the repo rate cuts.

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