27th February 2020

Cheaper SBI home loans & its impact on real estate

Everyone dreams of having their own special home from a young age. As adults, we realise what truly goes behind finding the perfect home. A major factor when it comes to buying a home is acquiring the finances to make such an investment. The easiest way to do is via home loans, provided by numerous banks across the country and the world. Residential developers in Kolkata along with the public were overjoyed after SBI, the biggest public sector lender of the country announced the reduction in its External Benchmark Based Rate (EBR) by 25 bps to 7.80% p.a. from 8.05% p.a. w.e.f. January 1, 2020.

What does this mean?

From October 1, 2019, any personal, housing or auto loan, etc. taken from a bank has been linked to any one of the 4 external benchmarks specified by the Reserve Bank of India (RBI). SBI’s external benchmark based lending rate, which is synced with RBI’s repo rate (currently at 5.15 percent), is fixed at repo rate plus 265 basis points. State Bank of India is offering home loans up to Rs 30 lakh at an effective interest rate of 7.95 percent for salaried individuals. For women, additional concession of 0.05% is available, making the lowest rate at 7.90%. For the first time in 17 years, the home loan interest has fallen below 8%.

Impact on Real Estate Sector

The economic slowdown of 2019 hit the real estate market and reduced the demand for houses. Real estate sales in the top six cities went down by 22% in the second half of 2019 compared to the first six months. The decrease in the interest rate of home loans may help revive housing demand and help improve the state of the real estate sector.

For buyers, the decrease in the interest for home loans will mean a reduced EMI and savings on the interest. Taking home loans will become easier, especially for those looking for affordable housing under the Pradhan Mantri Awas Yojna (PMAY). The sudden decrease in the interest will increase the demand among the buyers.

The increase in demand for housing because of cheaper home loans will help the public acquire homes at lower costs than usual, making it the ideal time to invest in real estate. Choose to invest with Srijan Realty, one of the leading real estate developers in Kolkata and build a luxurious, gorgeous home for yourself. For more details, visit

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