PSU Banks Reduced Home Loan Interest Rates To 6.7%

SBI HOME LOAN INTEREST RATE

The rate of home loan is a major factor that affects the total cost of your home. Since home loans are of high value and are long-lived, the interest of a house loan can have a long-term financial impact on the borrower. Due to the low-interest rate for home loans, not only will EMI be reduced but interest will also be paid.

The country’s largest lender, the State Bank of India (SBI), has slashed the interest rate on home loans by 10 basis points under a limited-term offer till the month-end.

The revised rates will start from 6.70% and will be linked to the CIBIL credit score. A borrower with a high CIBIL score will earn a fine interest rate.

The Reserve Bank of India (RBI) is pushing banks to cut their lending rates. The central bank has cut its prime lending rate, repo, by 250 bps from February 2019.

For home loans up to Rs 75 lakh, the rate for a CIBIL score between 700-750 is 6.9%; For scoring between 751 and 800, the rate is 6.8% and for scores above 800, interest will be 6.70%.

Customers can also apply from the ease of their home through the YONO app to get an additional interest concession of 5bps. On the occasion of International Women’s Day, a special 5 BPS concession is being made available to women borrowers.

Saloni Naryan, deputy managing director, Retail Business, SBI said that the SBI Home Loan portfolio touched Rs 5 trillion marks. The home loan sanctions have crossed Rs 1 trillion during this year. Home loans, which account for 23% of the bank’s domestic advances, have grown to 9.99% (YoY) by December 2020.

Benefits for Banks

With normal liquidity demand still below desired levels due to overflowing with excess liquidity, leading financial institutions such as SBI, HDFC, ICICI Bank and Kotak Mahindra Bank have reduced their rates with a fall, causing consumers to fall. The choice has depreciated.

Excess liquidity is a burden on the bottom of banks as they have to pay interest to depositors which is 2.5% less, however.

There is also a war on the rate of continued prodding by the Monetary Authority, which has lowered the repo rates to 200 bps from March 2020 to support revive economy hit by the COVID-19 pandemic, but the credit is still below 6%.

According to RBI data, the growth of home loans declined in FY2021 due to the epidemic, although the decline actually started in March 2020. The home loan growth rate in January dropped by 7.7% in January 2021, from 17.5% in January 2020.

For banks, housing loans are secured in the current scenario as the risk of default is minimal for SBI with a gross NPA of only 0.67% which leads the market, and also for HDFC, it is less than 1% of NPA.

Benefits for Consumer

There are other advantages for consumers as well – attractive property prices due to the pandemics and a reduction in stamp duty by many states have resulted in the pandemic affecting the realty sector. It is offering an additional 5bps lower rate to women and if implemented through its mobile app YONO. But depending on the risk profile of the lenders and the creditworthiness of the borrowers, the lenders are still deferred by different pricing.

Banks and Its Interest Rates

Below are the few leading banks and their interest rates

Data Sources: Google