State Bank of India (SBI) on Thursday said all home loans of up to Rs 30 lakh to eligible salaried borrowers will attract an interest rate of 8.3%, as against 8.35-8.4% earlier, in an environment of relatively slow mortgage growth. Car loans will now be priced between 8.7% and 9.2%, as against 8.75%-9.25% earlier. On Tuesday, the country’s largest lender had reduced the marginal cost of funds-based lending rate (MCLR) by 5 bps across tenures, taking the one-year MCLR to 7.95%. Growth in mortgages in the banking sector slipped to 12.8% year-on-year (y-o-y) in September from 13.2% in August, data released by the Reserve Bank of India (RBI) earlier this week showed.
The total outstanding on mortgages in the banking system stood at Rs 9.08 lakh crore as on September 29. The y-o-y growth figure at the end of September 2016 was 18%, with outstanding housing loans in the banking system at Rs 8.06 lakh crore. Vehicle loan growth has also been relatively slow at 9.2% y-o-y in September 2017, significantly slower than 22.8% in September 2016. Last month, ratings agency Crisil had written that demand for residential property is unlikely to revive in the next 12-18 months. “Though capital values have been under pressure over the past few quarters, a significant chunk of supply in many micro markets remain unaffordable,”analysts at CRISIL Research had said.
Mortgage growth had begun to show signs of pressure in June as home buyers put purchases on hold in anticipation of prices correcting further amid uncertainty ahead of the implementation of the RERA. Apart from the tendency to fence-sit and concerns around job losses in some sectors, a preference for rentals and risks associated with delivery of under-construction projects, are also reasons for tepid demand, Crisil added. The large inventory of units, especially in the mid segment, is adding to the overhang.