SBI Home Loans Growth to Decline in Current Fiscal Year

Strategic Insights -

The State Bank of India (SBI), the largest lender in India, is expected to post a decline in year-on-year growth in home loans in the current fiscal year, according to a top official of the bank. Last fiscal year, SBI had recorded a year-on-year growth of 32% in home loan advances, totaling ₹71,193 crore. The decline in growth is attributed to decreased demand for home loans due to inflation, high real estate prices, and rising interest rates.

Key Takeaways:

  • The SBI's home loan advances growth will be a shade lower than last year, with a drop in demand due to inflation, high real estate prices, and rising interest rates.
  • The change in pricing of home loans, particularly the discontinuation of the teaser scheme, is a significant factor contributing to the decline in growth.
  • The SBI had offered teaser loans with interest rates of 8% for the first year, 9% for the second and third years, and a floating rate thereafter, which made the loans more attractive to customers.
  • As of December 31 last year, the total outstanding retail home loans for SBI stood at ₹82,376 crore.
  • From January 1, the interest rates on home loans were linked to the base rate, which currently stands at 8.25%.
  • In the current quarter, SBI has hiked the base rate twice, which has resulted in slightly higher interest rates for customers availing of home loans.
  • Customers can still avail of loans at a discounted interest rate till March 31, with a concession of 1% in the first year and 0.25% for the second and third year for loans up to ₹30 lakh, and 1.25% in the first year and 0.50% for the second and third year for loans above ₹30 lakh and up to ₹75 lakh.

Statistics:

  • Total outstanding retail home loans for SBI as of December 31 last year: ₹82,376 crore.
  • Interest rate on home loans in the teaser scheme: 8% for the first year, 9% for the second and third years.
  • Current base rate: 8.25%.
  • Discounted interest rate for loans up to ₹30 lakh: 8.75% in the first year, 9.50% in the second and third year.
  • Discounted interest rate for loans above ₹30 lakh and up to ₹75 lakh: 8.75% in the first year, 9.50% in the second and third year.
  • Total home loan advances last fiscal year: ₹71,193 crore.
  • Year-on-year growth in home loan advances last fiscal year: 32%.

Sources:

  • DNA (Daily News & Analysis), "SBI home loans growth to dip in current fiscal year" (undated)
  • Contify.com, distributed by Diligent Media Corporation Ltd. (2010)