Real Estate Welcomes SBI Home Loan Interest Rate Cut to 6.7%

The State Bank of India (SBI) has announced that as part of its festive season offering it will be offering credit score linked home loans at 6.7%, irrespective of the loan amount. Earlier a  borrower availing a loan greater than Rs 75 lakh, had to pay an interest rate of 7.15%; now with the introduction of the festive offers, a borrower can avail home loan for any amount at a rate as low as 6.7%. The offer results in a saving of 45 bps which translates to a huge interest saving of more than Rs. 8 lac, for a Rs. 75 lac loan with a 30 year tenure. The lender has also waived off the processing fees completely and will be offering interest concession based on the credit score of the borrower. The bank also cut its base rate and prime lending rate. With effect from September 15, 2021, SBI's base rate will be 7.45% and its prime lending rate will be 12.2%. Further, the rate of interest applicable for a non-salaried borrower was 15 bps higher than the interest rate applicable to a salaried borrower. SBI has said that it has removed this distinction between a salaried and a non-salaried borrower. "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," stated the bank. "This time, we have made the offers more inclusive and the offers are available to all segments of borrowers irrespective of the loan amount and the profession of the borrower. The 6.70% home loan offer is also applicable to balance transfer cases. We believe zero processing fees and concessional interest rates in the festive season will make homeownership more affordable," said C.S. Setty, Managing Director (Retail & Digital Banking), SBI. "With this democratized interest rate, SBI addresses the huge housing demand in the metros. This move is aptly timed, coinciding with the beginning of the festive season. This year, we are likely to see significantly improved traction in the housing segment during this period. 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," said Anuj Puri, Chairman – ANAROCK Group. Vikas Wadhawan, Group CFO, Housing.com, Makaan.com and Proptiger.com stated, “As the festival season is on, the latest reduction in home loan interest rates by SBI will help the sector gain further momentum. The prices are already subdued and buyers will be able to save a little more money. Additionally, the bank will not charge a processing fee and has removed the distinction between salaried and non-salaried borrowers. In April-June 2021, the market has already picked up the pace with around a 74% rise in new launches and 45% demand in less than Rs 45 lakh bracket; the reduction in interest rates will attract affordable and mid-segment buyers more.”