SBI cuts home loan rate by 0.25 per cent

Taking cue from its competitor HDFC Ltd, State Bank of India on Sunday announced a cut in home loan interest rate by up to 0.25 per cent for new borrowers.

For women borrowers the rate has been aligned to the base rate, or the minimum lending rate of 9.85 per cent per annum, SBI said. For other borrowers, the interest rate will be 9.90 Per cent.

This brings SBI’s offering at par with the rate charged by Housing Development Finance Corporation (HDFC), which had announced a rate reduction last Friday. However, for existing customers, HDFC’s rate is still lower by 10 bps.

Banks started reducing interest rates from earlier this week, after the Reserve Bank of India (RBI) said further policy rate reduction would depend on how banks reduce lending rates. Banks had resisted reduction despite the 50 bps repo rate cut by RBI since January.

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

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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.