SBI pegs new home loans at 8%
Prabhakar Sinha | TNN New Delhi: In a move that may force other banks to bring down home loan rates, the State Bank of India cut its floating home loan rate to 8% on all new loans, irrespective of the loan amount. The current rates range from 8.5% to 11%, depending on the loan amount. The new scheme will be offered from Monday until April 30, and the rate will remain unchanged for one year. SBI's decision on Saturday means that for fresh borrowers EMIs on home loans of Rs 30 lakh or more will drop sharply. The EMI on a Rs 30 lakh loan for 20 years will fall by 15%, while on a Rs 50 lakh loan it will drop by 18%. The maximum benefit will accrue on home loan amounts of over Rs 75 lakh, where the interest rate comes down by three percentage points from 11% to 8%. That's the good news. The bad news is that the cut will not benefit most existing borrowers. It will, however, help those who borrowed under the special scheme announced by the Indian Banks' Association (IBA) in December. Under that scheme, interest on home loans up to Rs 5 lakh was fixed at 8.5% and on loans between Rs 5 lakh and Rs 20 lakh at 9.25%. For existing borrowers, SBI is offering a new personal loan scheme called 'SBI Lifestyle Loan'. This multipurpose loan can be up to 10% of their home loan, subject to a maximum of Rs 5 lakh at 8% interest, and must be repaid in a year. * SBI rate cut aims to spur realty demand * New Delhi: SBI's decision to cut its floating home loan rate to 8% seems to be a response to RBI's statement on Tuesday that banks have not fully passed on to their customers the benefits of the central bank's liquidity-infusing measures since October 2008. Since that statement, Punjab National Bank, the second largest government-owned bank, has also cut its benchmark lending rate by half a percentage point on Friday. But floating rates on its home loans remain between 8.5% and 10.25%. An SBI spokesperson said the decision was aimed at kick-starting demand for real estate. However, property developers are not optimistic, with many saying it was encouraging but inadequate. Some bankers, speaking on condition of anonymity, argued it was a smart SBI move. Interest rates were likely to fall even lower by March-April and the country's biggest bank was hoping to lock in borrowers at 8% for a year before that happened, they said. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
