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With more and more lenders offering low home loan rates to their customers, the industry is all geared up to witness a huge change in the home loan front.
The State Bank of India (SBI) has recently cut the lending rates up to 50 basis points effective from August 7.
SBI has decided to offer home loans of about Rs. 30 lakh at 10.25 per cent from 10.5 per cent and the loans between Rs. 30 lakh to Rs. 75 lakh at 10.4 per cent. With this reduction, SBI will be the prominent bank with cheaper home loan rates compared to its competitors. On a Rs. 10 lakh 20 year loan, a 50 basis point reduction would result in savings of Rs 286 per month.
Since, SBI has not announced a revision in its base rate, this reduction will apply only to the new customers. Nevertheless, SBI will allow its existing borrowers to refinance their loans for a fee. With the Reserve Bank of India (RBI) and the National Housing Bank (NHB) wanting lenders to waive pre-payment charges, other lenders are in dilemma as they risk facing a toss in their portfolio.
Customers of SBI are safe because of the withdrawal of pre-payment charges. Currently, most of the home loans can be closed without a pre-payment penalty and in case an existing bank with a new loan is not reducing the interest rates, customers can shift to SBI.
(Base Rate= 10.00% p.a.)
|
Loan Amount |
Linkage with Base Rate over the tenor of the loan |
Effective Rate |
| Up to Rs 30.00 lakh | 0.25% above Base Rate | 10.25% p.a. |
| Above Rs 30.00 lakh and up to Rs 75.00 lakh | 0.40% above Base Rate | 10.40% p.a. |
| Above Rs 75.00 lakh | 0.40% above Base Rate | 10.40% p.a. |
|
No fixed rate option in any limit bracket. |
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Thanks for the article. keep on writing.
I heard SBI is planning to cut lending rates further. It is a very good news to new customers. Thanks for posting this article
I hope lending rates cut will be applicable to existing customers also. :/
I’m planning to shift to SBI. They are coming up with good plans.Also very good article. thanks for sharing. Well explained. Love your website