State Bank of India has cut the interest rate on home loans above Rs 75 lakh by 10 basis points to 8.55%-8.6%, with effect from June 15. The move comes close on the heels of a similar reduction in home loans of smaller amount.
Soon after the RBI announced in its credit policy a cut in the statutory liquidity ratio (SLR) by 50 bps and reduced the risk weightage on home loans above Rs 75 lakh to 50% from 75% earlier, the State Bank of India – India’s largest bank – today cut the interest rate on home loans above Rs 75 lakh by 10 basis points to 8.55%-8.6%, with effect from June 15. The revised interest rates will be 8.55% pa for salaried women borrowers. For others, the rate of interest will be 8.60% pa. This is the second reduction in interest rates in the last two months by SBI, which had reduced its interest rates by 25 bps on April 9, 2017.
Commenting on the move, Rajnish Kumar, MD, National Banking, SBI, said, “Buying a home is a big decision. SBI has always been at the forefront in keeping the customers benefit first. This interest rate reduction will help home buyers come closer to their dream home. Taking a cue from the recent RBI reduction in risk weightage on home loans, SBI is passing on the benefit to its customers by reducing its interest rates on home loan above Rs 75 lakh.”
It may be noted that in its second bi-monthly monetary policy review of this financial year on June 7, the RBI had kept the repo rate unchanged at 6.25%. However, it had reduced SLR by 50 basis points to 20%, starting June 24, which is likely to infuse liquidity in the banking system by close to Rs 50,000 crore. Also, to help banks lend more for housing in large cities and make high-value home loans cheaper, the RBI had reduced the risk weightage on home loans above Rs 75 lakh to 50% from 75% earlier. “This will ensure that rates in this segment get reduced and more customers in this category who were doubtful will now take a plunge. The rates above Rs 75 lakh, that were .25-.5% higher and in the range of 8.6-8.9%, may now reduce and come to the same level as 8.35%,” Rishi Mehra, CEO of Wishfin.com, had said commenting on the RBI move. He had also said that the cut in SLR will ensure that lending rates come down further in the next quarter or so.
Now the rate cut by SBI has proved that more banks and housing finance companies (HFCs) may reduce their rates in this segment in the coming days, which will be beneficial for customers seeking high-value home loans.
SBI and a few other banks had reduced their home loan rates recently. However, the cut was mostly in the rates of lower-value home loans up to Rs 30 lakh and the high-value home loans were either left untouched or rates were cut slightly.