SBI launches buy to let mortgages in UK

STATE Bank of India is entering the British buy-to-let mortgage market as part of a push to increase the size of its retail division.

The lender, which is majority owned by the Indian government, has just begun offering sums of between £50,000 and £1.5m to professional landlords and people who own second homes.

It plans a full-scale public launch over the winter after giving its new products a “dry run” this autumn.

Deepak Ahuja, head of consumer banking and wealth, told City A.M. that SBI would have a conservative lending policy amid the weak housing market.

“It has been stagnant and property prices have fallen. We think over time there will be an uplift. We see housing as a bellwether of the UK economy and it is going to come back.”

The bank is offering loans for a period of five to 25 years with a loan-to-value ratio of 60 per cent.

Mr Ahuja said he expects buy-to-let mortgage customers to be roughly evenly split between property investors and people who simply want to rent out a second home.

SBI, which is listed in Mumbai, is 59 per cent owned by the Indian government. The rest is owned by ordinary shareholders.