SBI offers home loans up to Rs50 lakh at 8%

The State Bank of India (SBI) has further sweetened its offer on home loans by reducing interest rates through three special schemes.

People looking at a home loan of up to Rs50 lakh will get a fixed interest rate of 8% for the first year and 8.5% for the next two years. After the third year, the floating interest would be 2.75% below the State Bank advance rate (SBAR) — the rate, that keeps varying, at which SBI lends money to its best customer. The borrower can also opt for a fixed rate, which will be 1.25% below the SBAR.

Similarly, a person seeking a loan of more than Rs50 lakh will get an interest rate of 8% for the first year and 9% for the second and third year. A floating rate of 1.75% below the SBAR or a fixed rate of 0.75% below the SBAR will be applicable after the first three years.

The bank is offering 8% interest for first five years on loans up to Rs5 lakh, and a floating rate of 2.75% below the SBAR or a fixed rate of 1.25% below the SBAR will be applicable for the next five years. “Under the 8% scheme for the first year, there were concerns on the stability of interest rate. We did a product review and we changed the scheme based on the kind of response we got,” a senior SBI official said.

After launching the 8% scheme, the SBI has sanctioned Rs2,100 crore worth of home loans, including new loans and balance transfers, in each of the last three months, the official said. “Our target now is to double the amount we sanctioned last year,” he said.
SBI says the scheme is not in response to requests from low-cost housing developers. But officials from the Tata Housing Development Company had told DNA earlier that they had been seeking lower interest rates for low-cost housing.

PC Sukanand, managing director of CSC constructions, said: “We are negotiating with banks for lower interest  for our low-cost projects (in Bangalore).”