Housing and Development Finance Corporation
MUMBAI: Lenders are going all-out to woo retail borrowers ahead of the festival season as corporate loan growth continues to remain sluggish and liquidity improves. The State Bank of India and HDFC have brought down home loan rates while others like Punjab National Bank have cut retail lending rates and waived processing charges.
In a bid to attract more big-ticket borrowers in metros, SBI and HDFC have cut rates on home loans above Rs 75 lakh on the back of improved liquidity. The move by two of the country's largest home loan providers will prompt other lenders review their interest rates, bankers said.
Following the rate revision, SBI will offer home loans above Rs 75 lakh at 10.10% (10.30% earlier) for female borrowers and 10.15% (10.25% earlier) for male borrowers. For loans below Rs 75 lakh, existing rate will continue. HDFC has also reduced interest rate on loans above Rs 75 lakh to 10.15% under its monsoon bonanza scheme, which is valid until the end of this month. Loans up to Rs 75 lakh were already being offered at 10.15% under a 'Winter Bonanza', which has been extended under the new scheme.
Both lenders have brought down rates only for new borrowers. For interest rates to come down for existing borrowers, the lenders will have to bring down their benchmark rates. Bankers said that the benchmark 'base rate' is likely to be revised if Reserve Bank of India signals lower cost of funds through a policy rate reduction.
SBI said on Tuesday that the bank had reduced interest rates on home loans significantly from December 20, 2013 and a separate interest rate structure was also rolled out for women. "It has now been decided to offer uniform interest rate on home loans from August 26, 2014, irrespective of the loan amount."
The home loan rate for women applies on all borrowings where she is the sole applicant or the first co-applicant and also the sole or the first co-owner of the property. Bank sources said that the cost of procuring a home loan was the same irrespective of whether it was for Rs 5 lakh or Rs 75 lakh. "We have seen that larger borrowers are more conscious of the rate of interest as even a 10 basis point reduction makes a difference," he said.
Punjab National Bank said to contribute in the growth of GDP and with the onset of festival season, the bank has devised a 'Festival season Bonanza' offer on retail loans. Under the scheme, home loans up to Rs 2 crore will be available at the bank's base rate of 10.25%.
The bank has also waived processing fees and documentation charges on home and auto loans.