SBI home loan customers to get only 50% benefit of cut in base lending rate

Q: SBI may have cut its base lending rate by 40 bps to 9.3% following RBI's latest policy rate cut, but the actual reduction in housing loan rate will be a maximum of only 20 bps.

Ravindra Singh,

5th October 2015

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Replies (4)

Hi Rakshit,
The Maxgain loan is a home loan structured as an overdraft. In this loan category, the borrower is not charged any interest for any surplus that the borrower charge in a current account linked to the loan. For a Maxgain loan above Rs 1 crore, interest has been revised to 9.75% for women and 9.8% for men.

Yogendra, Bangalore

7th October 2015

Comment

I heard that besides revising expansion on its home loans, SBI has also made high-value Maxgain loans more expensive. What is Maxgain Home Loan?

Rakshit, Mumbai

6th October 2015

Comment

Right Rakshit,
Because the bank has revised the expansion at which it will advance home loans for borrowers to 20 bps above its standard base rate as against offering loans at base rate earlier.

Bank had taken a decision to revise the expansion to protect its margins since the rate cut has been front-loaded without an equivalent reduction in the cost of funds.

Kashif Ahmed, Delhi-NCR

5th October 2015

Comment

Yes, only old borrowers stand to gain more than new customers. A woman borrower who had taken a loan in the 1st week of October would get home loans at the base rate that is 9.7%.

Following the revision in the base rate, the borrower would see her loan rate coming down to 9.3% (base rate) in the next quarter.

Mahendra, Mumbai

5th October 2015

and if she delayed taking the home loan to October 5, she will be able to avail the loan at only 9.5%. The lending rates applicable to women will also apply to joint loans where the 1st borrower is a woman. For all other borrowers, the interest rate would be 5 bps higher (9.55%).

Kashif Ahmed, Delhi-NCR

5th October 2015

SBI chairman Arundhati Bhattacharya had earlier suggested that the bank be allowed to come out with a teaser loan-type scheme to incentivize new borrowers. However, the RBI has not been very favorable to the proposal.

Mahendra, Mumbai

5th October 2015

Yes, the happiness over State Bank of India's 40 bps (0.4%) reduction in interest rates is possible to get watered down significantly for home buyers. India's largest bank SBI told that the interest rate on new home loans will be only 20 bps lower which is less than 1/2 of the 50 bps reduction in standard rates by the RBI.

Mahendra, Mumbai

5th October 2015

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