State Bank of India slashes home loan interest rates by 25 bps to 6.7%

Country's largest lender, State Bank of India, has reduced lending rate in home loans by 25 basis points (bps) on downward revision in the risk premiums. The revised rates will be 6.7 per cent for loans upto Rs 30 lakh. The old rate for this slab was 6.95 per cent.

C S Setty, managing director ( digital and retail banking) said the bank has reduced the risk premium (varying across slabs) as defualt rates have remained low. However, the state-owned lender has not lowered credit underwriting standards. The interest rate will continue to be linked to credit score and those with high credit score will get home loans upto Rs 30 lakh at 6.7% interest rate. 

Last year, the lender had hiked risk premium on back of rise in prospects of defaults due to Covid-19 pandemic. The people continued to pay installments on time and the few opted for moratorium offered under Covid-19 regulatory package, Setty said.

In March, SBI had announced a special offer with interest rate starting from 6.7 per cent. The rates were restored to original level, varying across slabs, after end of offer on March 31, 2021.

By February 2021, SBI's home loan portfolio reached Rs 5 trillion-mark. It is aiming to double that to Rs 10 trillion in five years.

The bank is expecting its home loan portfolio to touch Rs 7 trillion by FY24, buoyed by an increased desire among youth to own homes early in life, rising incomes, and government policies like the cuts in stamp duty and subsidy.