The honeymoon seems to be nearly over for the Indian consumers who were once spoilt for choice with cheaper housing loans offered by PSU banks like SBI for last couple of months. Now consumers may well have to gear up for higher interest rates after 7th November, said a top brass of a PSU bank.
SBI’s decision to extend the special offer for home loans till end of this festive season (7th November) is to cash in on the 50 lakh central government employees who have recently received 21% hike in their overall salary structure, thanks to the Sixth Pay Commission.
There is every indication that home loan rates are going to rise because of rise in inflation, poor agricultural output, rising international crude oil prices and huge government borrowings. Hence the regime of low interest rates is bound to change.
There is no doubt that the government will try to keep the rates lower. But the system is not geared to deliver that. “Rollback in home loan interest rates is inevitable keeping in mind the health of the bank(s) after November,” said the top official.
SBI’s low interest rate regime was earlier valid till the end of April. The bank had then frozen the interest rate on new home loans at 8% for the first year. The interest rate was expected to be revised as per the prevailing rates.
A top SBI official reiterated that the special low interest rates were aimed at stimulating demand during the current economic slowdown boosting the laggard real estate sector.
Said a top official of SBI, “With the central government employees now flush with money which they received as per the Sixth Pay Commission recommendations, we are quite confident to increase our home loan portfolio by targeting them. This is also because the government employees have got additional purchasing power. Our dedicated marketing teams spread across the country have already started targeting the government employees wanting to buy homes.”
Thanks to the combined impact of low interest rates and pay commission money, SBI is expecting to increase twofold its home loan disbursals in the current fiscal. The bank has already disbursed Rs6,500 crore between April-August period of 2009 under its special home loan package as against Rs9,300 crore during the whole of the previous fiscal 2008-2009.