Mumbai: Upping the ante in the housing loan segment, State Bank of India on Monday steeply reduced its affordable home loan rates by up to 25 basis points, offering a lower rate of 8.35 percent to new women borrowers.
With around 26 percent market share, the nation's largest lender is also the biggest player in the home loan segment. Even at the existing 8.60 percent, SBI offers the lowest rate.
HDFC, the second-largest player in the space, offers loans at 8.65 percent to women for loans up to Rs 75 lakh and 8.7 percent for others. Similar is the minimum rate being offered by the largest private lender, ICICI Bank.
As for male borrowers, the state-owned bank said the limited period offer is valid till July 31 and the new rate for the salaried will be lower by 20 bps at 8.40 percent.
One percentage point is 100 basis points (bps).
Under the new government scheme, loans under Rs 30 lakh qualify for affordable housing in which the borrower gets an interest subsidy of Rs 2.67 lakh per annum.
SBI managing director for national banking, Rajnish Kumar said the 25 bps reduction is applicable to new women borrowers who are salaried, while for the non-salaried women borrowers, the reduction is 20 bps.
Similarly, a male salaried borrower can get a new loan at 8.40 percent, 20 bps lower than the prevailing rate, and a non-salaried male borrower can avail of a loan at 15 bps lower than the current rate, Kumar said.
"This is a huge saving for the borrower as the 25 bps reduction translates into a saving of Rs 530 per month on EMI," Kumar told PTI, adding that the new rates will be effective from Tuesday (May 9).
Explaining the reason behind the move, which makes its offering the lowest in the industry, Kumar said the bank has seen a hike in home loan inquiries of late and reduction in rates will further help millions of buyers fulfill their dream of owning a home.
Also, the bank expects that the new rates will attract the fence-sitting borrowers to go in for a loan now.
"This is a giant leap to give a fillip to the affordable housing segment keeping the government vision of providing housing for all by 2022," Kumar said.
"A lot of customers are undecided on a new home as rates of the market as well as finance have been high for too long. That should hopefully change now," Kumar added.
With a home loan book of Rs 2.23 trillion, SBI leads the home mortgage segment with 25-26 percent market share.
He, however, said the new offer may not push up its market share significantly as 45 percent of its Rs 2.23 trillion home loan book is already under the Rs 30 lakh bracket and the rest of the credit industry is also very aggressive.
SBI is also giving a special offer for construction finance to builders for affordable housing projects.
"This will give a dual push both for construction finance and also for home finance for affordable homes, but the bank did not quantify the reduction," he said.
Asked about the delinquency levels in the home loan segment, he said the highest is among the rural borrowers with a ticket size of under Rs 4 lakh, but for other segments, he claimed that SBI has the lowest bad loans.
The SBI stock closed 0.91 percent higher at Rs 298.65 on the BSE today as against a 0.23 percent rise of the Sensex.
