State Bank of India’s move to offer home loans at as low as 8% is set to start a new price war in the home loan market. The fact that bank will allow borrowers to switch to itself after foreclosing existing loans may have strong impact on other banks’ business.
As a result, many other banks, particularly the nationalized ones, will jump into the battle probably. SBI officials though are saying that the scheme was not aimed at attracting other bank’s customers. SBI maintains that objective of the rate cut was primarily on stimulating growth in the economy and incentivising home loans.
However, analysts feel that after witnessing a sharp slowdown during the credit crunch period of Sept-Oct period last year, home loans market was heating up again and one may not rule even the private lenders trying to counter the influence of SBI’s rate cut on their business.