SBI now offers home loans at 8.30%, auto loans at 9.20%
04 November 2017
State Bank of India (SBI), the country's largest lender, has reduced interest rate on home loans to 8.30 per cent, bringing its home loan rates to the lowest in the market.
The state-run lender hopes the new rate to bring in more customers in the home loan segment.
The reduction in home loan rate follows SBI lowering its one-year MCLR by 5 basis points to 7.95 per cent from 8 per cent earlier. Home loans lending rates are pegged over and above one-year MCLR rate. While for the salaried men the spread stands at 40 basis points, women borrowers have to pay 35 basis points over and above MCLR for home loan.
"With this reduction, SBI's offering in home loan is the lowest in the market. The new rates will be effective November 1," SBI said in a statement.
"With this reduction in rates, we are offering lowest rates for most of our product offering in retail loans. Lower rates along with wide distribution network and use of digital technology to enhance customer experience is a perfect package for any retail loan customer," P K Gupta, SBI MD retail banking, said.
The effective interest rate for all eligible salaried customers will be 8.30 per cent per annum for loans up to Rs30 lakh.
Rates have been reduced by 5 basis points (0.05 per cent) in all other loan brackets.
"Over and above of 8.30 per cent rate, an eligible home loan customer can also avail of an interest subsidy of Rs2.67 lakh under the Pradhan Mantri Awas Yojana scheme," the statement said.
SBI also lowered its auto loan rate to 9.20 per cent from 9.25 per cent following the reduction in MCLR. Women borrowers can, however, avail of auto loans at a lower rate of 9.15 per cent due to the lower spread over MCLR rate applicable to them.
For a car loan customer, interest ranges from 8.70 per cent to 9.20 per cent compared to the earlier 8.75-9.25 per cent. The exact rate depends on the amount of loan and the credit score of the individual, it said.
Another state-run lender Bank of India (BoI) reduced its MCLR in September this year, when it reduced its rate from 8.40 per cent to 8.30 per cent.
Private sector majors are yet to follow suit as ICICI Bank has its one-year MCLR rate still at 8.20 per cent. Axis Bank, however, had its MCLR to 8.25 per cent in January this year.
Analysts expect other banks also to reduce MCLR rate because of the reduction in incremental cost of borrowing and the availability of funds.