SBI, HDFC reduce home loan rates - Times of India

The author has posted comments on this articleTNN | Dec 20, 2013, 01.47AM IST

MUMBAI: Two of the country's largest lenders, State Bank of India and HDFC, have cut home loan rates in a surprise bonanza for borrowers who earlier this month saw interest rates inch up. SBI, for the first time, has offered better loan deals to women borrowers. This move, the bank says, will empower women by increasing their share in home ownership.

A day after RBI governor Raghuram Rajan decided to hold rates, SBI said that its home loan rates for up to Rs 75 lakh have been reduced from a high of 10.5% to 10.1% if there is a woman borrower involved. Home loans where a male is the sole borrower will incur 10.15%.

HDFC, meanwhile, said that it has launched a "Winter Bonanza" for home loan customers effective Friday under which loans up to Rs 75 lakh will be available at 10.25% as against 10.75%. The mortgage company said that the new rates are valid for all new applications submitted before January 31, 2014.

The lower rates will be available only to new borrowers since there has been no change in the benchmark rates. In the case of SBI, new borrowers will see their rates change when the bank revises is base rate. In the case of HDFC, the benchmark is the prime lending rate or PLR. SBI had hiked its base rate to 10% from 9.8% in November. HDFC had hiked its prime lending rate by 10 basis points to 16.75% on December 1 this year.

In a statement, SBI said that under the revised rate its EMI per Rs 1 lakh for a tenure of 30 years will be Rs 885 for women borrowers and Rs 889 for others against the prevailing EMI of Rs 900. "We had sched uled a meeting of our asset-liability management committee on Thursday to take a view on rates after the RBI policy. Since there was no change in rates, we have launched this special scheme which we usually launch in the second half," said Keki Mistry, CEO and vice-charirman, HDFC. He said that the corporation had his week reduced interest rates on 15-month deposits.

SBI's discounts for women are available on both individual and joint loans where the woman is the first borrower. Another change common to both lenders is the offering of a flat rate for loans up to Rs 75 lakhs. Earlier both offered differential rates for loans above Rs 30 lakh. Until Thursday's revision, SBI offered home loans up to Rs 30 lakh at 10.3% and higher amounts at 10.5%, while HDFC offered loans up to Rs 30 lakh at 10.5% and higher loans at Rs 10.75%. Bankers said that one reason for the merger of the maturity baskets was that RBI had revised the risk weightage on home loans.

While earlier banks had to set aside higher capital for loans above Rs 30 lakh, RBI had made the risk weightage uniform for loans up to Rs 75 lakh from June 2013. Reacting to the mid-quarter policy review on Wednesday, SBI chairman Arundhati Bhattacharya said that the bank was looking at tweaking its home loan rates to provide better deals to new borrowers in light of the economic slowdown.

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