Upping the ante in the housing loan segment, State Bank of India has steeply reduced its affordable home loan rates by up to 25 basis points, with the lowest rate of 8.35 per cent for new women borrowers.
State Bank of India, on May 8, 2017, announced a steep reduction in its affordable home loan rates by up to 25 basis points, with the lowest rate of 8.35 per cent for new women borrowers, who are salaried. For the non-salaried women borrowers, the reduction is 20 bps.
With around 26 percent market share, the nation’s largest lender is also the biggest player in the home loan segment. Even at the existing 8.60 per cent, SBI offers the lowest rate. HDFC, the second-largest player in the space, offers loans at 8.65 per cent to women for loans up to Rs 75 lakh and 8.7 per cent for others. Similar is the minimum rate being offered by the largest private lender, ICICI Bank.
For male borrowers, SBI said the limited period offer is valid until July 31 and the new rate for the salaried will be lower by 20 bps at 8.40 per cent. A non-salaried male borrower can avail of a loan at 15 bps lower than the current rate, said a highly placed source in the Bank. “This is a huge saving for the borrower as the 25 bps reduction translates into a saving of Rs 530 per month on EMI.” The new rates will be effective from May 9, 2017.
Explaining the reason behind the move, which makes it’s offering the lowest in the industry, the said source said the bank has seen a hike in home loan inquiries of late and reduction in rates will further help millions of buyers fulfill 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’s vision of providing housing for all by 2022, the source 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 Rs 2.23 trillion, SBI leads the home mortgage segment with 25-26 percent market share. He, however, said the new offer may not push up its market share significantly, as 45 per cent of its Rs 2.23 trillion home loan book is already under the Rs 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 has not quantified the reduction. Clearing the air about the delinquency levels in the home loan segment, the source said that the highest is among the rural borrowers with a ticket size of under Rs 4 lakh, but for other segments, SBI has the lowest bad loans.