Banks Prune Home Loan Rates

September 10, 2007	(Be the first to rate this story!)  Loading ...
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Interested home loan buyers do not need to be afraid of interest rates anymore and can pick their dream house soon. Since the banks are seeing large investments, the rates are finally falling after nearly three years.

HDFC Ltd. has already cut its floating interest rates by a quarter a percentage point (0.25%) to 11% under its special monsoon offer. The bank has also lowered its processing fee. Following in footsteps is Bank of Baroda. It has recently trimmed its rate by 50 basis points to 11% for loans up to Rs 20 lakh and 11.25% on home loans above Rs 20 lakh.

Then, it is Allahabad Bank which has reduced its rate by 1 percent point cut to 12% to 25-year loans. However, the banks have made offers valid for new borrowers only. Existing home loan customers require waiting for some more time to enjoy a reduction.

Other banks such as the State Bank of India (SBI) are likely to join the race in near future. As the festival season is approaching, these offers will pitch as a bonanza. Well! The good news is that the reduction on interest rates will continue even later as they plan to pass on the decline in the cost of funds. The deposit rates have already come down.

Existing borrowers will have to wait for the reference rate to lower down. However, they need not worry as continued high liquidity in the system will result into lowering of benchmark rates soon, say bankers.

High liquidity is the only underlying reason for bankers to search for potential customers.  Bad loans account for less than 1% of the home loan portfolio. With this, the segment is once again coming up as a nice option for bankers.

News Published Under:   Home Loans |

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