For loans up to ’30 lakh: SBI slashes affordable home loan rates by 25 bps

A woman borrower can get loan at 8.35%; male salaried borrower at 8.40%

State Bank of India, SBI, SBI home loans, SBI home loan reduced, affordable housing finance companies, AFHCs, business news, indian economy, indian express, india news

State Bank of India. (File Photo)

State Bank of India (SBI), the country’s largest lender, has announced a 25-basis points (bps) rate cut in affordable home loans to 8.35 per cent per annum, the lowest in the market. While a woman borrower can get a home loan at 8.35 per cent, for a male salaried borrower, the rate will be 8.40 per cent, 20 bps lower than the prevailing rate, and a non-salaried male borrower can avail of a loan at 15 bps lower than the current rate.

“The effective interest rate for all eligible salaried customers will be 8.35 per cent per annum for loans up to Rs 30 lakh,” SBI said. Over and above, an eligible home loan customer can also avail of an interest subsidy of Rs 2.67 lakh under the Pradhan Mantri Awas Yojana scheme. The new rate will be effective from May 9.

The new rate reduction of 0.25 per cent for women will be for the salaried borrowers who can avail of 8.35 per cent, and for the non-salaried, it will be a 20 bps cut. The interest rates for customers availing of a home loan above Rs 30 lakh have also been reduced. “To supplement the affordable housing push, SBI has also come out with special offerings for construction finance to the builders for affordable housing projects. This will give a dual push both for construction finance and also for home finance for affordable homes,” SBI said.

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Rajnish Kumar, managing director (national banking group), SBI, said: “We have seen a steep hike in the home loan enquiries recently and reduction in rates will further help millions of home buyers fulfill their dream of owning a home. Individuals can apply for home loans through multiple channels. SBI offers bouquet of home loan products catering to different sections of the society.”

SBI has a home loan book of Rs 2,23,000 crore with a 25-26 per cent market share. The new offer may not push up its market share significantly as 45 per cent of its home loan book is already under the Rs 30-lakh bracket and the rest of the credit industry is also very aggressive.

As loan facilitations go, the affordable housing segment is getting the best deal in town because government support and tax incentives together mean interest paid could be significantly low for a home loan taken. Under the credit linked subsidy scheme of the Pradhan Mantri Awas Yojana, home loan EMIs could reduce by up to 45 per cent for the economically weaker section and the low income group.

“No surprise, then, that new pure-play affordable housing finance companies (AFHCs) have been on a tear, with their assets under management (AUM) rocketing 50 per cent in the past fiscal to Rs 23,000 crore as on March 31, 2017, compared with Rs 15,000 crore as on March 31, 2016,” Crisil said.

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Krishnan Sitaraman, senior director, CRISIL Ratings, said: “We expect AUMs of the new AHFCs to clock 40 per cent CAGR over the next four years, compared with 17-18 per cent expected for the housing finance sector as a whole. A quarter of home loans today are for affordable housing, driven by a plethora of facilitations.”