Mumbai: Housing Development Finance Corp. Ltd (HDFC), India’s largest mortgage lender, on Monday slashed interest levels on home loans all the way to Rs 30 lakhs by 15 basis points for new borrowers, to gain the momentum created by the government’s support for low-cost housing.
For mortgage loans between Rs 30 lakh and Rs 75 lakh the attention remains unchanged at 8.50 percent for all borrowers. For mortgage loans above Rs 75 lakh it is currently 8.55 percent, from 8.75 percent for many, it said.
The other day, SBI intensified competitors in home loan segment by lowering its mortgage loan rates by 25 basis points (100bps = 1 percentage point) to 8.35%. While ICICI Bank has reduced interest levels by 30bps from the prior rates, HDFC’s rate reduction is 15-20bps while the mortgage company had already moved down rates to 8.5% last month.
Banks have shown great fascination with the affordable housing segment because the government introduced incentives for home buyers in the form of interest subsidies.
“Further, borrowers can also choose to link their home loans with Marginal Cost of funds-based Lending rate MCLR-6 Months or I-MCLR-1 Year. The bank is the first to offer such flexibility to customers. The reduced rate will be effective from May 15, 2017, for new borrowers,” ICICI Bank said.
“Post demonetization, banks have sharply reduced their marginal cost of lending rate, compressing the yield spread between banks and housing finance companies…” said Udit Kariwala, senior analyst at India Ratings and Research.
ICICI Bank consumers taking home loans in the affordable segment will also have the choice to decide on either a floating rate of interest or a hard and fast interest rate for the initial two/three years followed closely by floating rate.
“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,” ICICI Bank MD Chanda Kochhar said.
Relating to ICICI Bank officials, the final time home loan rates were at existing levels was at 2009.
With the inputs of PTI.