The lower interest rates charged by the State Bank of India (SBI) are contributing to a growth in its home loan portfolio at a time when the sky-rocketing real estate prices have slowed the credit demand. While fresh loans for buying houses are growing albeit at slow pace, buying out other banks' home loans is helping the public sector bank to strengthen its home loan book.
The bank has increased fixed rate home loans by 50-75 bps. While rates for loans of up to five years have been increased to 9.25% from 8.50% per annum, loans for above five years.
SBI home loans will now be available under two slabs -- under Rs 75 lakh (Rs 7.5 million) and above Rs 75 lakh.
ICICI Bank is offering the salaried having an account with it, credit from Rs 500,000 going up to Rs 1 crore against property owned by them
SBI's home loans, which offer a lower interest rate in the initial years and rate increases in the later years, were termed teaser loans by the Reserve Bank of India.
SBI home loans are now cheaper by 0.50-1 per cent depending on loan maturities and amount of loan. The bank also gives discount if the salary account is with the SBI and further discount if a higher margin is available. The interest rates on new car loans and two-wheeler loans have been reduced by 1 per cent depending on the amount and maturity of loan.
Home loans of up to Rs 75 lakh (Rs 7.5 million) would now be available to fresh borrowers at 10.10 per cent against the existing rate of 10.15 per cent, State Bank of India said in a statement.
SBI, the country's largest lender, first announced a rate cut of 0.25 per cent in its home loan rates on Thursday, forcing HDFC, the second biggest home loan financier, to respond.
It makes sense to shift to a home loan provider offering a lower interest rate or make occasional prepayments by using bonuses or other windfalls, says Sanjay Kumar Singh.
'If the new rate is lower than your current rate, ask your bank to shift you to it.' 'This can be done by paying a fee of Rs 5,000 to Rs 6,000.'
The biggest private sector lender, are swarming the market with discounts and special offers
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