Now home loan seekers have reasons to cheer as country’s major housing finance provider Housing Development Finance Corporation limited or HDFC and India’s largest private sector bank ICICI Bank have cut its home loan rates to match the rates offered by SBI last week up to Rs30 lakh for new borrowers. It is expected that many other banks and housing finance companies would follow them soon.
In a bid to boost affordable housing loan segment, HDFC on Monday followed suit of its rivals and lowered its home loan prices by 15 bps to 8.35 per cent for women borrowers and by 10 bps for men up to Rs30 lakh. Similarly, its peer ICICI Bank also announced its decision to reduce interest rates by up to 30 basis points (bps) for home loans up to Rs30 lakh earlier in the day, the rate-cut move came just after State Bank of India (SBI) and lIC Housing Finance reduced its home loan rate to attract maximum borrowers in the country.
However, banking sources said that many banks and housing finance companies would follow them soon to increase their loan portfolios for the next financial quarters. “The move for sharply reducing lending rate is expected in major public and private banks as well as several leading housing finance companies, including one of the major players Dewan Housing Finance limited (DHFl) and others which operate their lending business in the country with maximum loan exposure to the housing sector only,” it said.
On the other hand, ICICI Bank MD and CEO Chanda Kochhar, however, said, “I believe that this initiative, along with the bank’s expansion of home loan business in tier II cities, will empower a larger section of customers to realise the dream of owning a new home.”
Encouraging low-cost house loan seekers, she added, “Customers of economically weaker section and low income group (lIG) can avail the dual benefits of low interest rates from us and the Credit linked Subsidy Scheme (ClSS) under the Pradhan Mantri Awas Yojana.”
HDFC has lowered its mortgage pricing for new low-cost home loans to 8.35 per cent from 8.50 per cent for loan below Rs30 lakh for women borrowers and by 10 bps to 8.40 per cent for men. The new rates will be applicable with immediate effect. “For loans between Rs30 and Rs75 lakh, the new rates will be 8.50 per cent for all borrowers and for above Rs75 lakh, new loans will be priced at 8.55 per cent,” HDFC said in its statement. However, the lender had a flat rate of 8.50 per cent for all types of borrowers earlier. With this, the three largest players offer similar prices for new affordable home loans.
Earlier in the day, ICICI Bank also cuts its offering by 30 bps to 8.35 per cent for loans up to Rs30 lakh, bringing it in line with the country’s largest lender SBI, which had last week set the tone for the market. “With this reduction, salaried borrowers can avail home loans at among the lowest rates in the industry. Salaried women borrowers will get home loans at 8.35 per cent, while others will get at 8.40 per cent,” ICICI Bank said in a statement.
“The reduced rate will be effective from May 15, 2017 for new borrowers. Further, borrowers of ICICI Bank can also choose to link their home loans with I-MClR-6 Months or I-MClR-1 Year, claiming to be the first bank to offer such flexibility to customers,” it added.
State-owned bank SBI, which is also country’s largest bank and has the largest home loan market share, is offering home loans up to Rs30 lakh to salaried borrowers at 8.35 per cent. For loans above Rs30 lakh, the bank will charge 8.50 per cent. It will continue to charge 8.60 per cent on loans above Rs75 lakh.
Housing finance major lIC Housing Finance also launched its new home loan product ‘Griha Siddhi’ to offer similar rates of 8.35 per cent to women and 8.40 per cent to the rest for loans up to Rs25 lakh. In January this year housing finance firm DHFl had also reduced its home loan lending rate by 50 basis points to 8.60 per cent from 9.10 per cent.