The country’s largest lender, the State Bank of India, cut the lending rate on home loans by 25 basis points (bps) following the downward revision of risk premiums. The revised rates will be 6.7% for loans up to Rs 30 lakh. The old rate for this tile was 6.95%.
CS Setty, Managing Director (Digital Banking and Retail Banking), said the bank had reduced the risk premium (varying by slab) as default rates remained low. However, the public lender has not lowered credit underwriting standards. The interest rate will continue to be linked to credit score and those with high credit scores will get home loans up to Rs 30 lakh at an interest rate of 6.7%.
Last year, the lender increased the risk premium due to the increased outlook for defaults due to the Covid-19 pandemic. People continued to pay installments on time and a few opted for the moratorium offered under the Covid-19 regulatory package, Setty said.
In March, SBI announced a special offer with an interest rate starting at 6.7%. Prices were restored to the original level, varying by tile, after the offer ended on March 31, 2021.
As of February 2021, SBI’s home loan portfolio reached Rs 5 trillion. It aims to double this figure to reach 10 trillion rupees in five years.
The bank expects its home loan portfolio to reach Rs 7 trillion by FY24, boosted by an increased desire among young people to own homes early in life, rising incomes and government policies such as reduced stamp duties and subsidies.