Joining the rate-cut war, ICICI Bank, Axis Bank and two mortgage lenders today slashed home loan rate by up to 0.25 per cent.
DHFL lowered its home loan rate by 0.25 per cent, while Indiabulls Housing Finance reduced home loan rate by 0.20 per cent to 9.90 per cent.
The move follows rate cuts initiated by leading players State Bank of India and HDFC Ltd in the past few days.
Country’s largest private sector lender, ICICI Bank lowered interest rate for women borrowers and financially weaker sections to 9.85 per cent, while for others it was cut to 9.90 per cent.
The country’s largest lender SBI is also offering similar home loan rates effective yesterday.
Axis Bank, the third largest private sector lender, reduced rate on home loan by 0.20 per cent to 9.95 per cent at par with its base rate effective today.
“The bank has also introduced a single slab applicable for all salaried customers irrespective of the loan amount. The bank has accordingly aligned the pricing for new borrowers,” Axis Bank said in a statement.
ICICI Bank said reduction of home loan rates effective today is valid for all existing as well as new customers.
“With this announcement, women as well as applicants from weaker sections will get home loans at 9.85 per cent. The rate will be 9.90 per cent for all others,” the bank said.
The rate for fixed rate home loans have also been reduced.
“The borrowers taking fixed rate home loans with tenure of 10 years for loan amount up to Rs 30 lakh will have to pay 9.90 per cent, the same effective interest rate applicable for floating rate home loans,” ICICI said.
Effective April 10, the new base rate or the minimum lending rate is 9.75 per cent.
“The move will benefit all existing customers of floating home loans, whose home loan rates will be reduced by 0.25 per cent as per the change in the base rate,” ICICI said. After cutting the key rate twice this year, the central bank kept it unchanged at 7.5 per cent in its monetary policy on April 7.
The Reserve Bank had blamed banks for not passing the benefits of two repo rate cuts to borrowers and termed as “nonsense” the lenders’ claims that cost of fund was high.
Many banks including SBI, HDFC Bank and Axis Bank last week cut lending rates by up to 0.25 per cent after Rajan’s tough talk with bankers on the issue.
Although SBI had lowered its base rate by 0.15 per cent, it later announced a cut in spread over and above the base rate by 0.10 per cent for home loans, bringing home loan down to 9.85 per cent – at par with base rate – women borrowers.
However, the aggressive posturing by SBI is only for new borrowers, while the older borrowers will continue paying the spreads as per the older contracted rates.
As of December 2014, SBI had outstanding housing loan of Rs 1,52,905 crore as against Rs 1,35,129 crore at the end of third quarter of the previous fiscal registering a growth of 13.15 per cent.
Its closest competitor ICICI Bank had home loan portfolio size of Rs 84,425 crore.
HDFC Ltd loan book grew to Rs 2,19,951 crore at the end of last year as against 1,92,284 crore as at December 31, 2013.