SBI to close its 8% home loan scheme after this week

The country’s largest lender, State Bank of India, will not extend its eight per cent home loan scheme, the cheapest in the country, beyond November 8.

SBI had introduced its Happy Home loan scheme, that allowed the borrower to freeze the eight per cent interest rate for a year, in February this year.

In August, the bank had introduced another home loan scheme under a ‘My Home’ campaign, in which it offered loans up to Rs 5 lakh and tenure for up to 10 years, at an eight per cent per annum fixed rate during the first five years, among other offers.

However, the My Home campaign will come to an end on November 8.

“The bank has taken a decision that the eight per cent home loan scheme will not be extended beyond November 8. It is yet to take a decision on the new interest rates. It is likely to be more than eight per cent,” said sources at SBI.

Under the My Home Campaign, the bank was offering home loans in three segments, namely, SBI Hi-Five Home Loan, SBI Easy Home Loan and SBI Advantage Home Loan.

Under the SBI Hi-Five Home Loan, it has been offering loans up to Rs 5 lakh and tenure for up to 10 years at an eight per cent per annum fixed rate during the first five years. From the 61st month onwards, the rate will be a floating one, at an interest rate 2.75 per cent below the State Bank Advance Rate (SBAR) and 1.25 per cent below SBAR (for fixed rate).

In SBI Easy Home Loan, for maximum loan of Rs 50 lakh and tenure of up to 25 years, the interest rate is fixed at eight per cent per annum during the first year and at 8.5 per cent during the second and the third year. After three years, the rate will be 2.75 per cent below SBAR (for floating rate) and 1.25 per cent below SBAR for fixed ones, with a reset frequency of five years.

For loans above Rs 50 lakh and tenure of up to 25 years ( SBI Advantage Home Loan) , the rate is fixed at 8 per cent per annum during the first year and 9 per cent per annum during the second and third year. From the fourth year on, the rate will be 1.75 per cent below SBAR (for floating rate) and 0.75 per cent below SBAR for fixed ones, with reset frequency of five years.