SBI announces festive season offer; cuts home loan rates to 6.7%

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As the festive season is approaching, many banks are offering loans at reduced rates and other special deals for customers. The largest lender, State Bank of India (SBI) has now announced a festive offer that will let borrowers avail of a home loan for any amount at a rate as low as 6.7%. The bank was earlier charging an interest rate of 7.15% on home loans greater than Rs 75 lakh from borrowers. It has also decided to waive off the processing fees completely. Not just this, but according to an individuals’ credit score, the bank will be offering special deals and concessions.

As per the bank’s statement,” The offer results in a saving of 45 bps which translates to a huge interest saving of more than Rs. 8 lakh, for Rs. 75 lakh loan with a 30-year tenure.”

The bank has also withdrawn the separate and higher interest that was applicable to the non-salaried borrower. A non-salaried borrower was charged with 15 bps higher rates than a salaried borrower. With this move, the bank has created a democratised lending model and removed the distinction among borrowers.

The bank said, “Now, there is no occupation-linked interest premium being charged to prospective home loan borrowers. This would lead to a further interest saving of 15 bps to non-salaried borrowers.”

Affordable housing

C.S. Setty, managing director (retail and digital banking), SBI, said that with these offers the lenders want to ensure affordable homeownership among the people. He said that the home loan offer of a 6.70% rate is also applicable to balance transfer cases.

Earlier, the bank had also announced to cut the base rates by 5 basis points i.e. 0.05%, and the lending rate (PLR) by 5 basis points to 12.20%.  These rates have been applicable from September 15.

Democratised lending

On SBI’s home loan rates offer, Anuj Puri, chairman of ANAROCK Group, said, “This is an extremely competitive move that virtually negates all the previous limitations which applied to special home loan interest rates. Instead of focusing on just budget housing, this new interest rate is genuinely democratic as buyers from any budget bandwidth will benefit.”

Puri said that with this democratized interest rate, SBI has addressed the huge housing demand in the metros. “This move is aptly timed, coinciding with the beginning of the festive season,” he added.

“Waiving of processing fees and occupation-linked interest premium are added levels of savings. Cumulatively, this package is the most compellingly attractive offering ever extended by a housing loan lender and it is reasonable to expect that other lenders will follow SBI’s footsteps in order to remain competitive,” Puri said.