Is SBI's Home Loan rate cut a responsible decision?

SBI recently announced that it is giving home loans at 8% interest. Then it got clarified that this rate is only for first year. What will happen in the second year and afterwards? Rate prevailing at that time which is likely to be higher than 8% would be charged.

I am surprised at this. Have we forgotten that the genesis of the current crisis was subprime loans in US?

What is a subprime loan? Loan given to people who can't afford to repay being lured by mortgage companies and then refinanced by other agencies by low interest rate during first year. We learnt all this just a few months ago.

So has SBI forgotten this lesson? Is SBI's decision a responsible one? Or is it only a gimmick to be seen as complying with the directions?

Advice for Young professionals

In last six seven years many young professionals (not only techies) had got very good salary. With current recession, they have lost that high salary. It is not only today's salary that you have lost; for many of you you have lost past salary also. Let me show you how.

Suppose you got Rupees Fifty Thousand per month in 2004. You actually did not spend that money. You spent around twent thousand and saved thirty thousand per month. Your parents advised you to invest in a house. Its price was Rs 3 million. You paid Five Hundred thousand and took a loan of 25 Hundred thousand. If the house price has increased you gained. But if the house price has fallen then you have actually lost previous years' salary that you saved and invested.

What else you could have done. You could have spent that money on gaining valuable experience by travelling the world and gaining life's experience first hand. Instead you chose to spend time in front of computer and kept feeling you are a 'very good' boy or girl.

So think again. Don't spend every money that you can and also don't save every money you can. Think hard about the purpose of the money. Money is not the purpose of life.