SBI cuts home loan rates to 8 pc

Mumbai, Feb 1: Its bonanza for home loan borrowers. Home loan rates are going further southward. State Bank of India (SBI) has decided to freeze interest rates on all new home loans for a period of one year at 8 per cent per annum.

The new SBI rate is almost 175-275 basis points cheaper than the new rates of HDFC, the leader in the home loan segment. The move comes ahead of a bankers" meet with external affairs minister Pranab Mukherjee, who also holds the portfolio of finance ministry, on Monday. The issue of interest rate cut is expected to be taken up at the meeting.

The new scheme of eight per cent interest rate will be offered for loans availed between February 2 and April 30, 2009. According to SBI, interest rate will be reset after the freeze period to the same rate as originally applicable under the respective schemes. The benefit of the latest move will be available to SBI"s existing home loan customers.

Further, existing borrowers of the two home loan schemes — loans up to Rs 5 lakh and above Rs 5 lakh but up to Rs 20 lakh, called SBI Special Home Loan scheme — would also be given this rate for a period of one year.

“The originally contracted rate will be applicable after the one year period," SBI said. For small and medium enterprises (SMEs), the bank has introduced a package under which an additional working capital facility of 20 per cent of the fund-based limits will be extended at 8 per cent to take care of inventories of raw materials, finished goods and delayed payments from buyers in the current downturn. This will also have a freeze period of one year.

Besides, under a scheme called SME Help, term loans will be offered at 8 per cent for the first year to purchase fixed assets like generator sets.

OneIndia News (With inputs from Agencies)