As the festival season kicks off, so does the battle for the home loan market. Punjab National Bank (PNB) is all set to announce a competitive home loan rate to counter State Bank of India’s (SBI) low rate offering for the three months beginning August 8.
But at 8.5 per cent for three years, it is marginally higher than SBI’s offering. This rate will be for loans of upto Rs 30 lakh; for bigger loans, the rate would be 9.25 per cent or 25 basis points (100 basis points make 1 percentage point) lower than the current rate.
The bank is expected to announce this “festive offer” this week.
“This will be a part of the festive offering by the bank,” said a senior official who did not wish to be named.
Despite repeated attempts, top officials at the bank were unavailable for comment.
Between the two, SBI’s offer --- 8 per cent in the first year for loan between Rs 5 lakh and Rs 50 lakh and 8.5 per cent for the next two --- is cheaper. For Rs 5 lakh and below, the bank charges 8 per cent for five years.
PNB and SBI are not alone. Housing Development Finance Corporation (HDFC) reduced its rates in July to 8.75 per cent for loans upto Rs 15 lakh and 9 per cent for loans between Rs 15 lakh and Rs 30 lakh.
These are still higher than what is being offered by SBI and what PNB has planned.
Market leader ICICI Bank, however, has not revised its home loan rates — it charges an interest rate of 9.25 per cent for loans upto Rs 30 lakh and 9.75 per cent for loans between Rs 30 lakh and Rs 1 crore; beyond that it charges 10 per cent.