Home Loan Rates Drops Down to Single Digit

Published on: May 17, 2015 @ 13:33 

For  the  first  time, after  a  gap  of  more  than  four  years, the  home  loan  rates  have  dropped  down  to  single digits. All  top  lending  banks  have  brought  down  their  home  loan  interest  rates  and  it  appears  to  have  settled  around  the  9.90  per  cent  level. Both  private  and  nationalized  banks  have  lowered  their  lending  rates to  9.90 per  cent  from  April  onward.

Almost  all  top  lending  banks,  including  HDFC,  SBI,  ICICI  Bank,  Dewan  Housing,  India Bulls  Housing  etc. have  announced  the  reduction  in  their  home  loan  rates.

SBI  announced  a  reduction  of  10  basis  points  in  its  home    loan  rate. This  is  the  second reduction  by  SBI  to regain  its  position  as  the  cheapest  home  loan  provider  in  the  country. Now  a  new  borrower  at  SBI  will  pay the  home  loan  interest  at  9.90  per  cent  rate.  But  if the applicant  is  a  woman,  then  the  applicable  interest rate  will  be  9.85  per  cent.

ICICI  Bank  has  also  come  out  with  the  same  interest  rates  on  home  loan  and  is  equal  in lending  rates  of State  Bank  Of  India.  The  country’s  largest  private  lending  bank  ICICI  Bank has  announced  that  they  have lowered  their  lending  rates  to  9.90  per  cent  from  April onward.  It  announced  a  25  basis  point  reduction  in its  benchmark  base  rate,  and  it  said  it will  continue  to  maintain  the  same  spread  for  home  loans.  which   means  that  woman  and low-income  borrowers  will  get  loans  at  9.85  per  cent,  10  basis  points  above  its  base rate  of 9.75  per  but  for  all  other  borrowers,  loan  will  be  available  at  9.90  per  cent, 15  basis  points above  its base  rate.

ICICI  Bank  has  also  announced  that  it  will  also  offer  10  year  fixed  rate  loans  at  9.90  per cent  for borrowers upto  Rs 30  lakh.  The  25-basis-point  reduction  in  the  base  rate  with  effect from  April  10, 2015  will benefit  all existing  customers  of  floating  home  loans.

HDFC  announced  a  20  basis  point  reduction  in  its  base  rate  and offers  home  loan  interest rate  at  9.90  per cent.  HDFC  has  cut  lending  rates  for  woman  borrowers  by  five  basis  points to  9.85  per  cent  from  9.9  per cent  earlier  to  make  its  loan  pricing  at  par  with  that  of  rivals – State  Bank  Of  India  and  ICICI  Bank.  HDFC announced  that  the  new  product  christened ‘Woman  Power’  offers  a  different  rate  of  interest  exclusively  for woman  borrowers,  as against  9.9  per  cent  charged  for  other  borrowers.  According  to  HDFC  MD  Renu  Sud Karnad  it  is  aimed  at  promoting  house  ownership  among  woman  and  give  them  the confidence  of  owning  a house.  The  new  scheme  will  be  subject  to  conditions  like  the woman  being  sole  or  joint  owner  of  the property.

She  also  added  that  the  reduced  rate  will  apply  to  home  loans,  home  improvement  loans, home  extension loans  and  refinance  loans.  Besides,  loans  for  financing  housing  plots  for home  construction  will  come  at  9.9 per  cent. With  this  cut  HDFC’s  offering  comes  at  par with  others  like  SBI  and  ICICI  Bank,  which  offers home  loans  to  woman  at  9.85  per  cent.

With  the  slow  down  in  the  economy  and  slow  demand  from  the  corporate  segment,  retail has  acquired greater  prominence  in  banks’  strategies. Within  the  retail,  the  high  value  and safer  home  loans  are  a preferred  choice.  The  reduction  in  the  home  loan  interest  rates  will be  available  to  all  the  residents  as  well   as  non-resident  borrowers.

Dewan  Housing  Finance  and  India  Bulls  Housing  Finance,  too,  have  announced  that  they have  lowered  their lending  rates  to  9.90  per  cent  from  April  onward,  in  line  with  the  other top  lending  banks  of  the  country.

All  banks  have  brought  down  their  interest  rates  following  a  nudge  by  RBI  governor  Mr. Raghuram  Rajan  in his  policy  statement  on  April  7.  Prior  to  this  all  banks  were  providing home  loans  at  10.10  per  cent.  But now  lending  rates  have  dropped  down  to  single  digits  to 9.90  per  cent  for  general  borrowers  and  9.85  per cent  for  woman  by  some  banks.  After  a gap  of  so  many   years, this  is  a  welcome  step  taken  by  the  lending bank.

 

Ajay Verma

Ajay Verma, founder and writer of TheHousingWorld, a real estate and mortgage news website. He has over fifteen years of rich experience in the above mentioned industries.

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