SBI cuts home loans

State Bank of India (SBI) has announced a 50 basis point cut on its housing loan rates across all maturities under the flexible interest rat...

State Bank of India (SBI) has announced a 50 basis point cut on its housing loan rates across all maturities under the flexible interest rates scheme.

“With this, rates for maturities of up to five years, above five years and up to 10 years and above 10 years will be 9.5 per cent, 10 per cent and 10.5 per cent respectively. Besides, there is no processing fee for loans, which has been waived,” SBI sources said.

The move by SBI—the emerging major player in the housing loan segment—is likely to lead to other banks announcing slashing the home loan rates over the next few days. However, it is likely to put further burden on housing finance companies (HFCs) whose cost of funds are higher than that of banks as they have to depend more on long-term funds. The recent decision of the National Housing Bank, the nodal agency for HFCs, to reduce the provisioning requirement on housing loans to 50 per cent would only help fill the gap between the banks and HFCs to that extent.

This is the third bank to announce a cut in home loan rates after Union Bank of India and Punjab National Bank had announced cut, a few days back.