In a big relief to home buyers, State Bank of India (SBI) has decided to keep the interest rates on home loans unchanged for the next five months. However, the country’s largest bank has slashed deposit rates on various maturities by 25-50 basis points with effect from November 9.

The bank has decided to extend the availability of ‘My Home Campaign’ till March 31, 2010. Three home loan products are offered under this banner. “These products were originally launched on August 8 for a limited period of three months. Owing to the success of the schemes in reviving interest in the residential real estate sector and to help more customers to avail the benefits, the offer has been extended till March 31, 2010,” the bank said.

In other words, this could mean that home loan rates are likely to rise after March 2010. SBI will get a clear picture about the Reserve Bank of India’s plans on the rate front by that time. The RBI had withdrawn several short-term refinance facilities and hiked the statutory liquidity ratio (SLR) in its recent credit policy announcement. It was talking about an “exit” from the current accommodative policy in the near future.

“The policy statement signals that rate hikes are imminent. It will hike the reverse repo rate at its next policy meeting in January 2010. We expect a cumulative increase in effective policy rates of 300 bp in 2010,” said Goldman Sachs India vice-president and chief economist Tushar Poddar.

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