SBI cuts home loan interest rate by up to 0.25%

Matching its competitor HDFC Ltd, State Bank of India today announced a cut in home loan interest rate by up to 0.25% for new borrowers.

For women borrowers the rate has been aligned to the base rate at 9.85% per annum, SBI said in a statement.

However, for other borrowers, the interest rate will be 9.90%, 5 basis points higher than the base rate or the minimum lending rate.

The rates will be applicable for all new home loans sanctioned on or after April 13, SBI said.

The SBI announcement comes two days after HDFC Ltd, the country's largest mortgage firm, reduced home loan rate by 0.2% to 9.9% for new as well as existing borrowers.

SBI said: "Interest rate on the bank's home loans was 10.10% for Women under 'HER Ghar' and 10.15% for others."

To avail of the benefit, women borrowers should be sole applicants or first of the co-applicants and also the sole/ first co-owners of the property, it said.

Interest Rate for SBI existing floating rate home loan borrowers has also been reduced to the extent of reduction in the bank's base rate to 9.85% effective April 10.

The revised EMI per lakh for a loan tenure of 30 years will be Rs 867 (for women under HER Ghar) and Rs 871 (for others) as against Rs 885 and Rs 889 respectively, prior to reduction in base rate, it added.

Last week, many banks including State Bank of India, ICICI Bank, HDFC Bank and Axis Bank cut lending rate by up to 0.25% after RBI Governor Raghuram Rajan's tough talk with bankers on the issue.

After cutting the policy rate twice this year, the central bank kept it unchanged at 7.5% in its monetary policy on April 7.

The Reserve Bank had blamed banks for not passing the benefits of two repo rate cuts to borrowers and termed as "nonsense" the lenders' claims that cost of fund was high.

"The banks marginal cost of funding (has) fallen, the notion that it hasn't fallen, is nonsense; it has fallen" Rajan had said.