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Home loan rates come down

Mumbai, Dec. 19: Two of the largest housing finance players in the market — State Bank of India and HDFC — today gave aspiring borrowers something to cheer about when they reduced interest rates by 15-40 basis points.

The relaxation came a day after the RBI surprised everyone by leaving policy interest rate unchanged at Wednesday’s mid-quarter review of monetary policy. The RBI had left both the repo rate and the cash reserve ratio unchanged at 7.75 per cent and 4 per cent, respectively.

Industry circles see the rate reduction as a ploy by both the players to improve their share in a highly competitive market. They do not rule out the possibility of other players jumping on to the bandwagon in the days ahead.

Announcing the rate cuts, the SBI said women borrowers would get an additional 0.05 per cent concession on card rates.

The SBI rejigged its card structure when it did away with the two earlier home loan slabs of up to Rs 30 lakh and above Rs 30 lakh. The country’s largest bank announced that housing finance would now be available under two slabs — under Rs 75 lakh and above Rs 75 lakh.

Loans of up to Rs 75 lakh will be available to new borrowers at 10.15 per cent against the existing rate of 10.50 per cent. For women borrowers, the rate of interest after an additional concession of 0.05 per cent will be 10.10 per cent for home loans of up to Rs 75 lakh.

The SBI said in a statement that the new rates would be effective tomorrow.

With regard to loans of above Rs 75 lakh, the new rate will be 10.30 per cent. For women borrowers, it is 10.25 per cent.

The lender added that consequent to these changes, the revised equated monthly instalment (EMI) per lakh for a loan tenure of 30 years would be Rs 885 (for women) and Rs 889 (for others). The prevailing EMI for Rs 1 lakh is Rs 900 for 30 years.

Soon after the SBI announcement, HDFC quickly followed suit by announcing a special winter bonanza for its home loan customers from December 20.

HDFC said this would be a limited period offer and was valid for all new applications submitted before January 31, and first disbursement taken by February 28.

The new rates for home loans up to Rs 75 lakh will be 10.25 per cent. Earlier, the company had two slabs — loans up to Rs 30 lakh (10.25 per cent) and loans between Rs 30 and Rs 75 lakh that came in at an interest rate of 10.50 per cent. This has now been reduced to 10.25 per cent.

Banking circles, however, ruled out the chances of any similar relief to existing borrowers as the benchmark rate is unlikely to be changed given the guidance of the central bank. In its monetary policy, the RBI had said that it would not refrain from raising the policy rate if headline inflation does not significantly decline for the month of December.

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