SBI Set to Deduct Home Loan Rates

October 22, 2008	(Be the first to rate this story!)  Loading ...
Print This Story   Email This Story Subscribe Newsletter

Good news for aspiring home buyers, the country’s largest home loan lenders State Bank of India (SBI) is on course to slash its housing loan interest rates by about 50 basis points before Diwali. Emboldened by the Government pumping in liquidity worth Rs 1,00,000 crore into the country’s financial system, SBI is finalising plans to slash rates after the credit review of the Reserve Bank of India (RBI) on Friday. Even though loans will become cheaper, the bank plans to tighten the criteria for lending to individual borrowers.

The current cash reserve ratio is about 6.5 per cent giving banks head room to lend to the market. The CRR cut on Thursday by the RBI had injected a Rs 100,000 crore liquidity into the system. Though loans may become cheaper during Diwali, the public sector bank plans to further tighten norms for checking the credit worthiness of individual borrowers. “The SBI wants to make a thorough check of the financial capability of the individual to pay back, to avoid defaults in the current market scenario globally,” an SBI official said. Union Bank of India (UBI) and Punjab National Bank have also lowered interest rates on home loans by 25-50 bps in the past one week.

However, the bank plans to go slow on commercial lending to the real-estate sector. With frequent advisories from the finance ministry and the RBI cautioning over exposure to the real-estate sector, banks have been going slow on lending to developers. As a result real estate prices have begun to decline. “In the secondary market (market for existing property) housing prices have come down by 10-15 per cent in the past six months. But price cuts in primary market (market for new homes) are still to occur. SBI’s move will be a bigger relief for existing home loan borrowers.

News Published Under:   Home Loans |

Comments