HDFC lowers home loan rate to 8.25 per cent for one year
Amid apprehensions of home loans getting costlier soon with rising inflation, housing finance major HDFC today sprang a surprise by lowering its new home loan rate to as low as 8.25 per cent, a move that could prompt others to follow the suit.india Updated: Apr 15, 2010 19:48 IST
Amid apprehensions of home loans getting costlier soon with rising inflation, housing finance major HDFC on Thursday sprang a surprise by lowering its new home loan rate to as low as 8.25 per cent, a move that could prompt others to follow the suit.
HDFC's announcement assumes importance in the wake of market leader SBI's offer of concessional first year loan at eight per cent interest rate coming to end this month.
Most banks said that they would wait for the time being before touching their home loan rates, even as a top SBI functionary said that it would have to take a call on it soon at an appropriate forum.
Under the new dual rate scheme, applicable on all fresh loans, the country's biggest mortgage provider would offer a fixed rate of 8.25 per cent up to March 2011, then 9 per cent for the next one year and the prevailing floating rate for the remainder of the loan tenure.
These are commonly known as teaser home loans where interest rates are lower and of fixed value in initial years and turn floating in the remaining years.
Prior to this offer, the lowest rate offered by HDFC stood at 8.75 per cent for its floating rate home loans.
Asked if SBI would also extend its teaser home loan scheme, scheduled to end this month, in view of HDFC's decision, a senior official at the PSU lender told PTI: "A view has to be taken (on this issue) and that would be taken at an appropriate forum."
At the same time, private sector lender Axis Bank's President (Large Corporates and International Banking) Partha Mukherjee said: "We will have to wait how banks are reacting to the issue."
"Besides, we also have to wait to see what is the impact of the base rate (a minimum lending rate to be effected by banks July onwards as per RBI's directions) on the industry," he added.
Sources said that private sector major ICICI Bank has also not yet decided on any revision in home loan rates.
"This is a flexible product with dual rates. The fixed rates are applicable for all new loans irrespective of the loan amount," HDFC said in a statement.
The teaser rates have been a major issue in the home loan market in the recent past, with public sector lender SBI walking away with a big pie of the market through its own teaser rates. A number of lenders, including HDFC, had followed SBI last year in offering teaser rates, but most of these offers were discontinued earlier this year in a rising interest rate scenario.