HDFC cuts home loan rate by 50 bps

HDFC cuts home loan rate by 50 bps
The Financial Express, August 14, 2009, Page 13

Banks and housing finance companies, including Housing Development Finance Corporation (HDFC), the largest housing finance firm in the country, have reduced their rates for loans.

While HDFC has reduced its rates by 50 basis points from 9.5% to 9% for loans between Rs 30 and Rs 50 lakh, the corporation has retained old rates for other categories of loans. The reduction is effective from Thursday, said sources.

Launching its festival season bonanza, Delhi-based Punjab National Bank (PNB) has slashed home and car loans by 50 basis points. Punjab National Bank’s campaign comes a week after SBI’s three-month-long home loan campaign, offering loans at 8%.

“Under the offer, housing loans up to Rs 30 lakh will be available at discounted rate of interest of 8.50% under fixed interest rate option (fixed for three years) across all repayment tenors, besides full waiver of processing (upfront) fee and documentation charges,” Punjab National Bank said in a statement.

The margin also stands reduced to 15% for housing loans up to Rs 20 lakh, it said. On car loans, a rebate of 0.5 % is offered to prospective borrowers under the fixed option. The offer will be valid from Friday till October 31, it added. Right now, the fixed rate of interest offered by bank is 9%.

Bank of India, which has also launched its festive offer, will charge an interest rate of 8.5% for loans ranging between Rs 30 lakh and Rs 50 lakh and 9.25% for the second year.

Similarly, for home loans ranging between Rs 50 lakh and Rs 1.5 crore for a maturity period of five years, the bank will charge an interest rate of 9.5% for the first year and 9.75% for the second year. Subsequently, it will go to floating interest rate, which is 10.25% at the moment, said M Narendra, executive director of the bank.

“As we have recently launched a festive home loan scheme, I think it would help us achieve our target. We already have a special package for home loans, under which we are offering an interest rate of 8.5% for loans up to Rs 20 lakh, which will be increased to 9.25% for the second year and 9.75% for the third year. Subsequently, it will become floating interest rate, which is 9.5% at the moment,” he said.

However, for long-maturity home loans in 10 years under this category, the bank is charging an interest rate of 9.5% for the first year and 10% for the second year.