An important announcement has been made by State Bank of India (SBI) to cut the interest on home loan rates of up to Rs 30 lakh by 25 basis points (100bps =1percentage point). After the cut the new rate is 8.35% as compared to the previous 8.50%. On home loans of more than Rs 30 lakh, the country’s largest lender cut the rate to 8.50% from 8.60%. Other banks are likely to follow the trend after this cut, as this further widens their gap with SBI’s rates. SBI had reduced the lending rates, for more information read here http://namratagroup.com/blog/hdfc-sbi-lending-rate-cut/.
This home loan rate cut announcement by SBI is done in accordance with Prime Minister’s vision of providing “Housing for All“by 2022. The offer is valid for a limited period to give a boost to the affordable housing sector. As of now, the offer stands valid till July 31 and the bank will take decision on extending it henceforth. Under the PMAY, loans of up to Rs 9 lakh and up to Rs 12 lakh receive interest subsidy of 4% and 3% respectively, while in rural areas loans up to Rs 2 lakh will get an interest subvention of 3%.The value of the subsidy amounts to Rs 2.67 lakh for an eligible borrower. Meanwhile, the largest housing finance company HDFC said that it had already cut rates for new customers to 8.5% in February. According to an HDFC official, the company decided to trim rates due to a reduction in the marginal cost of funds. The company has been traditionally targeting a spread of 2.2-2.35%, and has been revising rates whenever the spreads move out of this range.
Other banks like ICICI Bank and Axis Bank offer home loans are presently offering loans at 8.65%. Meanwhile, Bank of India has reduced its Marginal Cost of funds-based Lending Rate (MCLR) by 10bps from 8.50% to 8.40% with effect from May 7, 2017. There is increased competition among banks for home loans which accounted for half of all credit growth in FY17. SBI’s Kumar said, “We have a 26% market share in home loans and we expect our Rs 2.3-lakh-crore portfolio to grow 17-18% this year.“
With so many developments in the real estate industry and RERA getting implemented, this home loan rates cut by banks are sure to get the sector perform better. RERA is sure to make this sector more organized, transparent and structured that will work in the best interest of both customers and builders. The constant reforms in the policies, norms by the government and reduction in bank rates is surely luring the customers to make informed decisions and making the dream of owning their own home a reality!
As sourced from Times of India.