With not too many takers for home loans given the high interest rates, it?s a virtual slugfest in the marketplace. With the festive season here, banks are falling over each other to woo customers with concessions. The latest bait was thrown by HDFC on Monday when it attempted to woo customers with a product that allows them home loans at a fixed rate for the first three years or five years. A couple of weeks back, ICICI Bank had unveilved a similar product giving customers an option to borrow at a fixed rate for either the first year or the first two years.
Meanwhile, Axis Bank continues to advertise the fact that its home loans don?t attract a pre-payment penalty with Indian Bank, Punjab National Bank and Bank of India having done the same. State Bank of India (SBI) has decided to go a step further and offer borrowers a rate that is 25 basis points lower than what its rate card says. Moreover, it has waived processing fees for both home and auto loans. “We do not want to offer a product similar to what ICICI and HDFC have launched since we are offering a 25 basis points discount on our home loan and we are charging between 10.75-11% across categories.The market is dull because property prices are too high,” said a senior SBI official. Bank of Baroda (BoB) does not intend to offer an interest rate rebate but MD Mallya, CMD, does believe there is room for lowering processing fees. “We are likely to give concessions on processing or documentation charges,” Mallya says.
Fearful of being frowned at by the Reserve Bank of India (RBI), both ICICI Bank and HDFC have taken care to see that the fixed rates of interest offered by them in the initial stages of the loan are in line with current market rates. The regulator had not approved of what were called ?teaser loans?, which allowed customers to borrow at a slightly lower rate in the first couple of years.