SBI cuts home loan interest rate to 6.8% | Hello Homes

In a move to bring its home loan interest rates closer to some of its public-run peers, India’s largest mortgage lender, State Bank of India (SBI), has lowered the interest rate to 6.8% annually.

Applicable on home loans of up to Rs 30 lakhs, this is a 10-basis-point (bps) further reduction in home loan rates by SBI. For home loans of over Rs 30 lakhs, SBI has pared the rate to 6.95% from the earlier 7%, hence, effecting a five bps reduction in rates.

“Home loan interest rates are linked to the CIBIL score and start from 6.80% for loans up to Rs 30 lakhs and 6.95% for loans above Rs 30 lakhs. Interest concessions up to 30 bps is also available in eight metro cities for loans up to Rs 5 crores,” SBI said in a statement.

Note that 100 basis points are equal to one percentage point. Also, note that the bank offers its best interest rates only to clients depending on their credit score. Even if one meets the loan amount criterion to get the lowest rate, they might have to pay higher, if their credit score is poor.  A credit score of over 700 is considered good while anything below it is an average credit score

The public lender will continue to offer its customers a complete waiver of the home loan processing fee, which was announced in 2020, to boost demand for housing finance.  Women borrowers are offered an additional concession of five bps. The same rate is also applicable on customers opting for balance transfer. Those applying through the YONO app, or portals, home loans.sbi, or sbiloansin59minutes.com, will enjoy a further rebate of 5 bps on interest rates.

The bank has stated that these concessions are available to customers till March 2021.

“We are pleased to improve our concessions to prospective home loan customers up to March 2021. With SBI’s lowest interest on home loans, we believe this move will facilitate and encourage home buyers to take the home buying decision with confidence. With the nation all geared up to move ahead post-pandemic, SBI would continue to support home buyers and the real estate sector,” said CS Setty, MD (retail and digital banking), SBI.

To boost festive spirit, SBI cuts home loan rates to 6.9%

October 22, 2020: With an aim to cash in on the festive spirit, India’s largest lender, State Bank of India (SBI), on October 21, 2020, announced a reduction of up to 25 basis points (bps) in its home loan interest rates. With that, housing loans from the state-run bank could now be borrowed at a 6.90% annual interest.

(As a 100 basis points are equal to one percentage point, 25 basis points is equal to 0.25 percentage points.)

While SBI will charge an interest of 6.9% on home loans of up to Rs 30 lakhs, the annual interest on home loans of over Rs 30 lakhs value will be 7%. The reduced rates apply for home loans of up to Rs 3 crores. The extent to which the reduced rates will apply, however, be decided by the bank, based on a candidate’s CIBIL score.

Borrowers applying for a home loan through SBI’s YONO app will also be provided additional reductions in rates. This works out to a concession of 20 bps on loans, apart from an additional concession of 5 bps, if the application has been made through the YONO app.

“In an extension of its festive offers announced recently, SBI offers a credit score-based concession of up to 20 bps from 10 bps earlier, for a home loan of above Rs 30 lakhs to Rs 2 crores, across India. The same concession would also be applicable for home loan customers for a loan amount of up to Rs 3 crores in eight metro cities. An additional 5 bps concession for all home loans is given if applied through YONO,” the bank said in a press statement.

The move by the SBI comes after some state-run banks reduced their home loan interest rates, starting a price war in this segment, after the RBI reduced its benchmark lending rate, the repo rate, to 4%. Despite the reduction, SBI is still behind Union Bank and Bank of India, which are currently offering housing loans at interest rates of 6.7% and 6.85%, respectively. Central Bank of India, Punjab and Sind Bank, and Canara Bank are also offering home loans in the same price range as SBI.

SBI waives processing fee on home loans to woo borrowers during the festive season

State Bank of India has announced concessions on the interest rate charged on home loans, of up to 10 basis points, for units bought in approved projects

September 29, 2020: India’s largest lender State Bank of India (SBI) has announced various concessional offers, to cash-in on the festive season that starts from October and continues till January, in India. With an aim to offer credit to home buyers at attractive rates, the bank plans to offer concessions of up to 10 basis points on interest, for units bought in approved projects.

The concession will, however, be offered to borrowers keeping in view their personal credit scores and the loan amount, the bank said. Across banks, borrowers with a credit score of over 750 can avail of home loans at lower interest rates. Charges are higher for individuals with a credit score in the range of 300 to 600.

Borrowers can avail of an additional discount of 5 basis points, if they apply for the home loan through SBI’s app, YONO.  “There would be a complete waiver on processing fees on home loans, for home buyers in approved projects. The bank is also providing special concessions of up to 10 bps on the interest rate for the customers, based on their credit score and loan amount. Additionally, home buyers can avail 5 bps interest concession if they apply for a home loan via YONO,” the bank said in a statement, on September 28, 2020.

As the lender currently offers home loans of up to Rs 30 lakhs, at 7% annual interest to salaried individuals, the festive discount could translate into loans at an annual interest of 6.85%, for this segment.

Despite the reduction, however, SBI will not be able to pip another public lender Union Bank of India from its position as the most cost-effective financial institution in the country for housing credit. Recently, the Union Bank of India reduced its home loan rates to 6.7% annually. On the other hand, home loans rates at SBI currently range between 7% and 7.35% annually.

After the RBI reduced the repo rate, at which lends money to financial institutions, to 4% in view of the ongoing Coronavirus pandemic-led financial crisis, several leading banks in India have lowered the interest rates on home loans to below the 7% level.

SBI reduces interest rate on MCLR-linked loans

July 9, 2020: In a move that would reduce the cost of borrowing, India’s largest lender, State Bank of India (SBI), in July 2020, reduced the interest on its home loans linked with the marginal cost of funds-based lending rates (MCLR) by 25 basis points, to 7%. It has also lowered home the loan interest on repo rate-linked loans to 6.65%.

SBI home loan interest rates

SBI interest rate for self-employed and high-risk individuals

SBI home loan rate for self-employed: Self-employed individuals have to pay 15 basis points more than the average rate.  This means for loans up to Rs 30 lakhs, they have to pay 7.15% interest. Women borrowers in this category would pay 7.05% interest.

SBI home loan rate for high-risk individuals: A borrower will have to pay 10 bps extra for loans of up to Rs 30 lakhs in case the loan to value ratio is greater than 80% and lower than 90%. In this case, women borrowers will have to pay 7% interest on home loan while men will have to pay 7.05%. Individuals falling under high-risk categories will also have to pay an additional 10 bps to avail of loans from SBI.

SBI MCLR home loan rate

In June 2020, SBI reduced its MCLR rate by 25 bps bring home loan rates between 7-7.35%. Before SBI made the switch and linked all its new loans to the repo rate, its home loans were linked to the marginal cost of funds-based lending rates (MCLR) regime, which became effective on April 1, 2016. This means those borrowers whose home loans were sanctioned before October 1, 2019, and after April 1 2016 still have their loans linked to the MCLR.

It is worth mentioning here that your old housing loan does not get switched to the repo-linked lending rate (RLLR) regime automatically. Old borrowers have to approach their branch and ask for a switch in case they desire to do so.

Benefits if you switch to RLLR regime

Let’s understand this through an example.

Mohit Sharma has his SBI home loan linked to the old regime while Aman Seth applied for his home loan at the SBI in December 2019. Both have taken Rs 30 lakhs as loan for home purchase for a 20-year tenure.  Here is a look at their yearly liabilities:

Saving under RLLR: Rs 44,733

Should borrowers switch to RLLR from MCLR?

In the MCLR regime, the reset period on home loan is typically one year while it is only three months in the RLLR regime. Since any changes in the monetary policy would be immediately reflected in your home loan EMI in case your loan is linked with the repo rate, it makes perfect sense to make a switch to enjoy greater transparency. However, borrowers with low appetite for swift changes might continue with the old regime.

Impact of home loan moratorium on EMI

If you pay a home loan EMI of Rs 25,000 every month, you do not have to pay it for the period between March and August 2020, under the moratorium. Starting September, the bank will include the outstanding amount of Rs 1.50 lakhs for these six months, in your home loan principal amount and charge interest on the entire amount. Interest will continue to accrue on the outstanding portion of the loan, during the moratorium period.

Source – Housing.com