At SBI, growth in home loans plunges 24%

The State Bank of India (SBI) has seen a major slowdown in home loans in the just-ended financial year.

The largest lender sanctioned Rs12,500 crore of mortgages, 24% less than the Rs16,370 crore it did in the fiscal before last, according to sources familiar with the development.

SBI’s home loan portfolio as of March 31, 2011, was Rs86,769 crore.

A senior official at SBI said the slowdown was because the bank decided to withdraw the special home loan product — or the so-called teaser — early in the fiscal.

Negative market environment and high interest rates also played spoilsport.

To push up its home loan growth and continue its leading position as a mortgage lender, SBI has been offering loans at extremely low rates.

Under the special scheme, SBI offers home loans up to Rs30 lakh at 10.5% and loans between Rs30-75 lakh at 10.75%. And all loans above Rs75 lakh are at an interest rate of 11%.

Rivals said they haven’t seen a huge impact on their home loan portfolios.

HDFC, the second-largest, hoped to grow its mortgage book by 15-20% last fiscal, the company’s vice chairman and chief executive officer, Keki Mistry had said.

HDFC also offered a fixed-cum-floating product, which, like the SBI scheme, was supposed to last till March 31.

LIC Housing Finance is the No. 3 player with a 10% market share.

The company launched its new Magic 3 scheme, on Monday, under which home loans up to Rs40 lakh are available at 10.7%, while those between Rs40 lakh-1 crore are offered at 11.25%.
Home loans of Rs1-1.5 crore are available at 11.75%, a company official told DNA.

These rates are fixed for the first three years and then it’s a floating rate from the fourth year. The first disbursement should be availed of by the customer before May 31.

“In the retail loans segment, we are likely to record a growth of about 20% last fiscal compared with fiscal 2011. This financial year (ending March 31, 2013) will be better on the back of declining interest rates and demand for housing loans increasing,” said V K Sharma, director and chief executive.

Demand for homes in Tier-II and Tier-III cities is going up, he added.

The company is in the process of launching other products such as home renovation loans and furniture loans which will drive growth further.