State Bank of India has decided to allow its old home loan borrowers, paying high interests, to move to the new lower rates, which were offered to other borrowers later, by paying 1% of the outstanding amount as conversion fee.
SBI has displayed the following message on its website in announcement Section
Home Loan customers with floating interest rates higher than current rates can switch over to current rates after paying 1% fee, contact your nearest branch for details
Those borrowers who took a home loan even a year ago are paying higher rates. In some cases, the difference is as high as 3%. So, in the interest of fair practices and transparency, we are offering the current floating rates to all our customers. On an average, the benefit to old customers could work out to be more than 1%,” a bank executive told the Business Line.
Currently, SBI charges 10.5% for loans up to Rs 3 million, 10.75% for loans between Rs 3 and Rs 7.5 million, and 11% for loans above Rs 7.5 million. The decision is expected to help one-third of SBI’s home loan borrowers of over 1.7 million in bringing down interest payments by as much as 2%, or a gain of about Rs 6,000 a month on a 20-year loan of Rs 5 million, The Economic Times said.