ICICI Bank And HDFC Cut Home Loan Rates By 0.15% To Compete With SBI

Published on: Nov 4, 2016 @ 16:12

ICICI Bank  and  HDFC  have  reduced  home  loan  interest  rates  by  0.15  per cent  up  to  a  loan  amount  of  Rs 75  lakh. Competition  in  the  home loan  business  has  begun  since  State  Bank  Of  India (SBI)  had  reduced its  rate  by  15  bps  early  this  week.

Following  the  rate  cut  of  0.15%  by  SBI  this  week,  ICICI Bank  and HDFC have  reduced interest  rates  by  15  bps  (100bps = 1 percentage  point) for home  loan  borrowers.

ICICI  Bank  on  Thursday  lowered  the  interest  rates  on  home  loans  by 0.15%   up  to  a  loan  amount  of  Rs  75  lakh.  Following  which  home loans  for  women  borrowers  will  be  9.15% from  the  earlier  rate  of 9.30%   and  9.20%  from   the  earlier  rate  of  9.35%  for  other  customers.   The  new  rates  are  effective  from  1  November   and  valid  till  November 30.

India’s  largest  mortgage  lender  HDFC,  too  announced  a  rate  cut  in  its home  lending  rates by 15  bps. HDFC’s  home  loan  up  to  Rs 75  lakh  for women  borrowers  will  now  attract  an interest  of  9.15%  and,  for others it will  be  9.20%,  effective  from  November  4.  The  Interest rate  for loan amount  beyond  Rs 75 lakh  has been  revised  downwards to  9.25% for women borrower  and  9.30%  for  others.

Reserve  Bank  Of  India had  reduced  its  key  lending  rate  by  0.25%  to  6.25%  after  the monetary  policy  review on  October  4.  Thereafter,  ICICI bank  also  reduced  its  benchmark  one-year  marginal  cost  based  lending  rate (MCLR)  to  8.95%  from  9.05%  on  28  October. Now,  ICICI  bank  has  also  reduced  the  spread  over  MCLR  to 20bps  as  against  35 bps earlier.

Moreover,  these  leading  banks  have offered  a  lot  of  benefits  such  as  waiver  of  processing fees  by  SBI  and overdraft  facility  by  ICICI  Bank. ICICI  Bank  has  announced  to  launch  a credit  facility  ‘ICICI  Bank  Home  Overdraft’  against  home  loans  for  salary  customers.  It offers   them credit  from  Rs  5  lakh  to  Rs 1  crore against  property  owned  by  them.  The product  offers  dual  advantage  of  a  term  loan  as  well  as  an overdraft facility.

“While  the  term  loan  provides  customers  with  quick  funds  for immediate needs,  the  overdraft facility  offers them the flexibility  to  access funds  instantly  for  expenses ,  as  and  when required”, the  bank  had said  in  its  statement.

Those  buying  the  overdraft  loan  from  the  bank  would  be  able  to utilize  the  funds  for  their personal  needs such  as  for  education, medical  treatment, home  renovation,  marriage  and overseas  travel among  others.

Beginning  from  a  minimum  of  Rs 5 lakh  to  a  maximum  of  Rs 1 crore,  customers  will  have the  facility  to avail a  minimum  10%  of the  total  amount  as  term  loan  and  maximum  90 % as overdraft.

ICICI  Bank  said  the  interest  on  term  loan  would  be  charged  as  per the  equated  monthly installment,  while on  the  overdraft  the  charges will  be  only   on  the  utilized  amount  for  the period  the  funds  are used.

According  to  experts,  since  there  is  low  credit  demand  from  corporate  sector,  most  of  the banks  are focusing on  retail  loans,  especially  the  home  loan  segment  as  it  seems  to  be  the  safest  growth  option  for  them.

According  to  analysts,  the  rate  reduction  effected  by  large  players  would put  pressure  on others  to  follow suit to  remain  in  the  competition. The  move  of  the  private  sector  lender’s can  be  seen  as  a  response  to  the  new home  loan  rates  announced  by  SBI.

Big  Lenders  have  started  passing  on  the  benefit  of  falling  key  interest  rates  in  the  system to their  retail customers. Therfore,  we  can  see  that  other  banks  will  also  announce  rate  cuts soon  to  lure  customers.


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