Axis Bank cuts fixed home loan rate to 10.40%
The bank is seeking to tap the increased demand for homes from middle income households
Dec 10, 2014
Source : livemint.com

 

Mumbai: Axis Bank Ltd, India’s third largest private sector bank by assets on Tuesday cut its fixed rate home loan interest rate to 10.40% from 11.75% earlier as it seeks to tap the increased demand for homes from middle income households.

The new interest rate which will be fixed for 20 years will be available for loans up to Rs.50 lakh in metro with property value at Rs.65 lakh and is valid till March 2015.

The cut in the fixed rate loan is also the first by any bank since the Reserve Bank of India (RBI) said that an interest rate cut is likely in the first quarter of calendar year 2015, on 2 December.

“There is strong demand from customers to get a fixed rate home loan. We expect demand for this product from suburbs like Virar and Vasai near Mumbai, tier II cities in states like Gujarat and south India and rural India,” said Jairam Sridharan, president of retail lending and payments, Axis Bank.

Home loans dominate Axis Bank’s retail loan book of Rs.90,277 crore with a 53% share and Sridharan expects it to continue to corner around 50% of the bank’s loan book for the rest of the year. Retail loans with 27% to 28% growth have been the fastest growing segment for the bank so far this fiscal year, but home loans have grown just 11-12%.

“This has been a slow year on home loans because big markets like Mumbai and surrounding areas and the national capital region have not grown because homes are not affordable and as borrowers are not confident that builders will finish construction in the given time frame,” Sridharan said.

Existing borrowers who pay a floating rate can shift to a fixed rate by paying half a percentage point of the outstanding principal as a one-time fee, while the bank has fixed a 2% pre-payment fee on this loan in case borrowers want to prepay their loans later, Sridharan said.

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