SBI is the best as of 2013. They completely stopped teaser rates and fixed-rate gimmicks, which other banks do.
SBI rate of interest as of July 2013 is 9.95. >> Latest interst rates here <<.
SBI, by default, provides overdraft loan account which no other banks provide.
If you park your surplus amounts in your overdraft loan account, your principle amount will come down for that many days you park your surplus amount. SBI calls this account with their trademark as Maxgain account.
Overdraft Loan account example:
For example, your outstanding loan is 30 Lakhs and say, you have 10 lacs in hand, but you really need this 10 lakhs after 18 months. So if you park this 10 lacs in your loan account, your principal amount will be 20 lacs and your interest will be calculated only for 20 lacs.
Please note your EMI will be unchanged even if you park this amount, which means, principle component will be more in the EMI and thus it helps close your loan faster.
Loan Amount less than Rs. 30,00001, 0.25% above Base Rate, ie., 9.95% p.a.
Above Rs. 30 lacs, 0.40% above Base Rate, ie, 10.10% p.a.
Fixed rate option not available for any loan amount.
All Rate are floating only
(Base Rate= 9.70% p.a.)
However, Axis bank and other banks have recently started following SBI and they also started offering competitive interest rates. LIC is another good options.
Theory of Home Loans:
Most banks take loan from RBI at RBI's Repo rate - which is around 9.5% as of 2013 and they lend it to the customers. This way, providing just above the Repo-Rate is not profitable to most banks, except for few banks that have surplus of cash. These banks really doesn't need to take loan from RBI inorder to provide you home-loan. Such banks can offer you attractive interest rates for home loans.
Institutions with surplus of cash are, LIC, SBI and other top popular banks.