For the State Bank of India (SBI), the market leader in the home loans segment, old certainly seems to be gold.
That is, old customers are gold.
Nothing else explains the latest rate tweak by the leading lender, which has kept home loan spreads unchanged for existing borrowers but has increased the same for new customers.
Earlier, immediately following the RBI’s repo rate cut of 0.5% on Sep 29th, SBI had pared its base rate by 0.4% to 9.3%. Naturally, prospective borrowers were agog with excitement.
Additional Reading: RBI Cuts Repo Rate by 0.5%: What This Means For You
In its latest circular dated Oct 3rd, women borrowers (new customers) will now need to fork out 0.2% over and above the base rate – an effective lending rate of 9.5%. Earlier, women borrowers were charged only the base rate, which continues to be the case for existing women borrowers.
Similarly, regular borrowers (new customers) will now be charged 0.25% over and above the base rate. With base rate being 9.3%, their effective base rate will now be 9.55%. Earlier, they were being charged 0.05% over and above the previous base rate of 0.7%, leading to an effective rate of 9.75%.
With this 2-steps-forward-1-step-back approach, the net reduction in home loan rates by one of the leading lenders of the country is 0.2% for their flagship product.
There are indications that other leading lenders might take the cue in resetting their own home loan rates.
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