Home Loans to come down soon

Finally there is some relief for people who have taken floating rate home loans and its almost the time for new home seekers. Majority of HFC’s are seeing large investments, the rates are finally falling after nearly three years.

One might be aware that the home loans market had being slump for more than a year with most of HFC’s witnessing slow down in home loan market. A rate cut was imminent and to start with HDFC 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.

ICICI is yet to announce any rate cuts but Bank of Baroda has already trimmed its rate by 50 basis points to 11% for loans up to Rs 20 lakhs 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.

The country’s largest bank State Bank of India (SBI) is 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.

Diwali is always a festive to rejoice and hope it should bring in more joys in the form of rate cuts.

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3 Comments

  1. SV

    This brings some much needed relief to borrowers! I believe currently Indian Bank offers home loans at 9.5% for 15 yr loans (by far the lowest I could find after a lot of research).

    Uday, I will also be helpful if you can post articles for second time home buyers about investment options in real estate.

  2. SV

    Read comment as “Uday, it will also be helpful if you can post articles for second time home buyers about investment options in real estate.”

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