ICICI Bank And HDFC Cut Home Loan Rates To 8.35%

Loan Rates

Published on: May 16, 2017 @ 17:04

India’s  largest  private  lenders  ICICI  Bank  and   HDFC Ltd  on  Monday have  reduced  home loan  rates  to  8.35 per  cent  on  loans  up  to  INR  30 lakh, thereby  bringing  the  rates  at  par  with  State  Bank  Of  India (SBI). Now, salaried  women  borrowers  will  get  home  loans  at  8.35 per cent  and  others  at  8.40 per cent  on  loans  up  to Rs 30  lakh. The  reduced rate  will  be  effective  from  May  15,  2017  for  new  borrowers.

Following  SBI  and  LIC  Housing  Finance,  ICICI  Bank  on  Monday  also announced  its  decision  to  slash  home loan  rates  on  loans  up  to  Rs 30 lakh  by  30  basis  points  (bps)  (100 bps = 1 percentage  point)  to  8.35 percent  from  8.65  percent  for  salaried  female  borrowers. For  other borrowers  it  has  reduced  the  rate  to  8.40  percent  from  8.70  percent to  boost  affordable  housing.  In  the  case  of  loans  above  Rs 30  lakh,  it will  be  available  at  8.50  percent  and  8.55  percent  for  women  and other  borrowers  respectively.

Further,  ICICI  Bank  will  also  give  new  home  loan  borrowers  the option  to  link  their  loans to  either  the  six-month  MCLR  or  the  one-year  MCLR. However,  most  banks  link  home loans  to  their  one-year MCLR.

Besides,  ICICI  Bank  said  that  the  customers  taking  home  loans  in  the affordable  segment  will  also  have  the  option  to  select  either  the  floating  interest  rate  or  a  fixed  interest  rate  for  the  initial  two/three years  followed  by  floating   rate.

ICICI  Bank  managing  director  Chanda  Kochhar  said  the  bank  is committed  to  supporting  the  government’s  vision  to  provide  housing for  all  by  2022. “In  line  with  this  commitment, we  have  reduced  the home loan  interest  rates  for  the  affordable  housing  segment. With  this announcement, customers  of  Economically  Weaker  Section  (EWS)  and Low  Income  Group (LIG)  can  avail  the  dual  benefit  of  low  interest rates  from  us  and the  Credit  Linked  Subsidy  under  the  Pradhan Mantri Awas  Yojana,” she  said.  This  initiative,  along  with  the  bank’s  expansion of  home  loan  business  in  tier  II  cities,  will  empower  a  larger  section of  customers  to  realize  the  dream  of  owning  a  new  home,  she  added.

After  ICICI  Bank’s  rate  revision  on  Monday,  HDFC  Ltd,  India’s  largest mortgage  lender, also  followed  suit  and  reduced  its  interest  rates   to  8.35  percent  on  home  loans  up  to  Rs 30  lakh. While,  ICICI  Bank  has reduced  interest  rates  by  30 bps  from  the  previous  rates, HDFC’s  rate reduction  is  15-20 bps  as  it  had  already  brought  down  rates  to  8.50 per cent earlier.

HDFC  cut  the  interest  rate  by  15 bps  to  8.35  per cent  for  new  female borrowers  and  cut  10 bps  to  8.40 per cent   for  others  for  loans  up  to Rs 30  lakh,  the  lowest  being  offered  and  at par  with  the  rates  now offered by  ICICI  Bank,  SBI  and  LIC  Housing  Finance  Ltd. Moreover, HDFC  offers  the  new  home  loan  rates  at  uniform  rates  to  all  borrowers   at  8.5 percent  for  loans  between  Rs 30  lakh  and  Rs 75  lakh and  for  above  Rs  75 lakh,  it  is  available  at  8.55  percent  from  8.75  percent.  Prior  to  this  interest  rate  cut,  HDFC  had  a  flat  rate  of  8.50 percent  for  all  types  of  borrowers.

Now,  SBI,  ICICI  Bank  and  LIC  Housing  Finance  and  HDFC  offer  lowest home  loans  rates  at  8.35  percent  for  women  and  8.40  percent  for  the others.

Last  week,  State  bank  of  India,  India’s  largest  lender,  was  the  first  to reduce  interest  rates on  home  loans. It  had  reduced  its  home  loan rates to  new  female  borrowers  by  25  bps  to  8.35  percent  on  loans  up  to Rs 30 lakh.  For  loans  above  Rs 30  lakh,  the  bank  charges  8.50 percent. It  will  continue  to  charge  8.60  percent  on  loans  above  Rs 75 akh.

Following  this,  LIC  Housing  also  launched  a  new  home  loan  product called  Griha  Siddhi  to  offer  rates  of 8.35  per cent  to  female  borrowers and  8.40  percent  to  the  rest  for  loans  up to Rs 25  lakh.

Banks  have  shown  great  interest  in  the  affordable  housing  segment since  the  government  introduced  incentives  for  home  buyers  in  the form  of  interest  subsidies. The  government’s ‘Housing  for  All’  initiative envisages  every  Indian  family  owning  a  house  by  2022. Besides, in urban  areas  housing  loans  of  up  to  Rs 9 lakh  and  up  to  Rs 12  lakh  will  receive  interest  subsidy  of  4  percent  and  3  percent  respectively, while  in  rural  areas  loans  up  to  Rs 2 lakh  will  get  an  interest subvention  of  3 percent.

The  interest  rate  competition  has  resulted  in  top  three  lenders  offer similar  interest  rates  for new  home loans,  to  gain  the  momentum created  by  the  government’s  support  for  affordable  housing. With  this reduction,  salaried  borrowers  can  avail  home  loans  at  among  the lowest  rates  in  the industry. The  move brings  ICICI  Bank’s  and  HDFC home  loan  rates  in  the affordable  segment  at  par  with  larger  rival  SBI, which  had  reduced  rates  last  week. The  new  rates  are  expected  to be  followed  by  other  lenders  as  well  both in  private  and  public  sector space  to  stay  in  the  competition.

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