The country's leading public sector bank, the State Bank of India, has announced a further cut in the interest rates for home loans, in line with its special three months long SBI My Home Campaign set to start from Saturday. The move will further intensify the home loan war between rivals public and private sector banks, which will leave no stone unturned to woo customers by providing cheap and affordable interest rates.

Under the new loan scheme, the bank will offer interest rate at 8 per cent for the first year; and 8.5% to 9% in the subsequent years, based on the size of deal. The bank has also extended the limit on the Easy Home Loan scheme from the existing Rs 30 lakh to Rs 50 lakh.

Meanwhile, Deepak Parekh, the chairman of the country's biggest home loan lender HDFC, criticized lenders for offering loans at fluctuating rates, warning a subprime-like crisis in India due to artificial decline in interest rates.

Mr. Parekh observed: "We are seeing some variations of teaser type housing loans being offered. The lure of low interest rate at the start of taking a housing loan is enticing. But are customers being made aware of future implications of this?"

Mr. R R Nair, Director and Chief Executive, LIC Housing Finance declined to revise interest rates saying: "We cut rates recently. There are no plans to cut them further."