SBI

01-Feb-2009, Sunday.

State Bank of India, country’s largest commercial bank, slashed it's home loan rates to 8% from earlier rate of 9.75%, for new customers over the coming year. The new rate will be effective for the period of 02nd Feb'09 to 30th Apr'09. It is the second time the bank has reduced home loan rates after the economy slow down.  

Prior to rate cuts, SBI charged home loan @  9.75% on floating basis and 11.25-12.25% on fixed basis. During December, it lowered the rate  to 8.5-9.25% for loans up to Rs20 lakh. Private sector banks charge between 9.75% and 12.50% interest on home loans. 

Thanks to Reserve Bank of India (RBI) has cut the repo rate by 350 basis points earlier, private and public setor banks were lowering their home loan rates. However, RBI left key policy rates unchanged at a review last week.

HDFC Bank also announced 50 basis points of rate cut for its home loans for the new borrowers, on Jan 17th.

Hope in future RBI may see further rate cuts for the beneficiary middle class peoples. However without enough regulations imposed for real estate business, there would not be any further improvement. Government should realize the need of regulations on valuation/pricing and policies on real estate which is really crucial at this stage. Though this is indirectly affecting the cost of living, this is a major factor to consider for saving lower middle class and poor people.