SBI offers home loan at 8% interest rate
The country's largest bank, State Bank of India (SBI) introduced a special offer for home loan segment in which the bank would provide loan at interest rate of 8 per cent, applicable up to April 30, 2009. It would be the lowest interest rate offered by any bank in India, applicable to all new as well as existing borrowers for one year.
The bank said in an official statement, "There is a genuine demand for home loans. We realized that potential borrowers were sitting on the fence, waiting for the right time to borrow. Our move will encourage borrowers to take the decision and also stimulate demand. This will also spur the real estate and allied sectors such as cement, steel and other construction materials."
The move came just two days before external affairs minister Pranab Mukherjee assumed charge of Finance Ministry and scheduled to meet bank's executives to review market scenario.
The offer would remain effective for one year and borrowers are required to pay the earlier contracted rate of 8.5% for Rs 5 lakh loan and 9.25% for loan up to Rs 20 lakh, after one year. Interest rate for amount beyond Rs 20 lakh would remain same under earlier interest cap. SMEs are also covered under the offer to buy assets at discounted interest rate.
Commenting on the development a bank executive said, "A borrower would first take into consideration the price of the flat and than look at the interest rates. If they feel that the property is over-priced, they will not borrow just because interest rates are low." He said that offer can prove successful if realtors cut property rates to encourage people for home purchase.