State Bank offers cheapest home loans at 8% interest rate
A CORRESPONDENT
State Bank of India (SBI) has announced home loans at the rate 8% for new borrowers. This is the cheapest home loan available in India now. State Bank (SBI) said in a press release that the 8% offer will last for a year.
For one year, the interest rate will be frozen at 8%. After one year, these home loan borrowers must pay the earlier contracted rate which in the case of special scheme borrowers will be 8.5% for loans up to Rs 5 lakh and 9.25% for loans up to Rs 20 lakh. The new SBI home loan interest rate, which is the cheapest among Indian banks, will be offered between February 2 and April 30, 2009, SBI said in a press release. Those who wish to apply for these loans should get their loans sanctioned before April 30.
Existing home loan customers can also make use of this cheap 8% home loan rate scheme, subject to conditions. For them, it will be only for 10% or Rs 5 lkah. The scheme is called SBI Lifestyle Loan.
Currently, most private sector banks charge home loan interest rates between 9.75% and 13%. Though India’s central bank RBI has aggressively reduced interest rates over the last months, banks have been reluctant to cut home loan rates and help spur lending and spending.
The Indian government and the central bank RBI have been trying to stimulate borrowing and spending by reducing interest rates. The cheapest home loans from State Bank is thus part of an effort to push up lending and borrowing. Since SBI is the largest bank in the country, an interest rate cut on home loans to 8% by SBI is expected to spark similar moves by other banks and thus enhance credit flows. If the SBI loan scheme turns out to be a success, other government-owned banks too may plumb for the 8% rate sop.
However, many feel that an interest rate cut alone wont help stimulate home purchases. This is becase despite a fall in prices, houses in many metros are still priced too high for retail house buyers. Unless the real estate prices come down, they feel, cheap home loan rates wont be of much use.
The SBI chairman has also hinted at the possibility of further lowering the interest rates. The RBI governor too had indicated a “downward bias” in interest rates during the quarterlt monetary policy review last month. At a meeting with the finance secretary in New Delhi on Monday, heads of public sector banks also agreed to reduce home loan interest rates soon.
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Pallabita Ghosh said on Wednesday, October 14, 2009, 12:06
Although SBI is boasting of giving loans at 8% I.R. during 1st year and at 8.5% for next 2 yrs., this glittery picture is of no use to the home purchasers in view of the kind of time they eat up for sanctioning the loan. I have a very painful experience with SBI in terms of every kind of dealing, be it availability of the branch manager, time for preparing advocate search report, valuation, access to the dealing officers at RACPC at BKC. The atmosphere is totally customer unfriendly and unprofessional. I had submitted my application for home loan with each and every requisite documents on 05.9.2009 and still waiting to hear from SBI. It is almost impossible to take a feedback from anybody from SBI. The builder has already started pressurizing me to pay up with interest. In due course of time all the so-called benefits due to low interest rate will become useless to me. SBI must realize that merely reducing interest rate will not make them the leaders in the market. Already my builder has stopped selling flats to the people who intend to take loan from SBI. There are many such builders who also discourage the customers to take loan from SBI as they cannot sustain the delay imposed by SBI.