State Bank of India (SBI) reduced its interest rate by 25 basis points (bps) on home loans up to Rs 30 lakh, to 8.35 per cent, from Tuesday for new women borrowers. For male borrowers, the cut is by 20 bps, to 8.4 per cent.
With around 26 per cent market share, the nation’s largest lender is also the biggest in the home loan segment (their loan book here is Rs 2.23 lakh crore).
And, even at the earlier rates, SBI offered the lowest. Housing Development Finance Corporation, second largest in the space, offers loans at 8.65 per cent to women for loans up to Rs 75 lakh and 8.7 per cent for others. So does ICICI Bank, the largest private lender.
The interest rates for customers availing a home loan above Rs 30 lakh have also been reduced by 10 bps. Over and above the rate benefit, an eligible customer may also avail of an interest subsidy of Rs 2.67 lakh under the Pradhan Mantri Awas Yojana.
Rajnish Kumar, managing director, said the new offer might not push up its market share significantly, as 45 per cent of its home loan book was already under the Rs 30 lakh bracket, and the rest of the credit industry wa very aggressive.
SBI is also giving a special offer for construction finance to builders for affordable housing projects.
Asked about delinquency levels in the segment, Kumar said the highest was among rural borrowers with a ticket size of under Rs 4 lakh. Rating agency CRISIL in a report on affordable housing finance, said growth in overall advances was expected to remain healthy at a 17 per cent compounded annual rate over the next three years. These are expected to almost double to Rs 12,70,000 crore by 2019-20, from Rs 670,000 crore as on end-March 2016, it said. Competition has intensified in the traditional home loans space, particularly from banks, which are being compelled by subdued demand and asset quality pressures in the corporate sector to focus on retail (to non-wealthy individuals) lending.
Banks· home loan growth is expected to outpace that of housing finance companies for the first time in five years. The competition could reduce as corporate credit demand picks up gradually, CRISIL added.
With around 26 per cent market share, SBI is also the biggest player in the home loan segment
HDFC, the second-largest player in the space, offers loans at 8.65 per cent to women for loans up to Rs75 lakh and 8.7 per cent for others
As for male borrowers, SBI said the limited period offer is valid till July 31 and the new rate for the salaried will be lower by 20 bps at 8.40 per cent
Under the new government scheme, loans under Rs30 lakh qualify for affordable housing in which the borrower gets an interest subsidy of Rs2.67 lakh per annum