This Diwali may bring much-awaited cheer to those planning to take home and auto loans, which were characterised by uninterrupted rate hikes for the past two years.
With five years of low inflation and ample liquidity, Housing Development Finance Corporation (HDFC), the country?s largest housing finance company, on Monday announced a special floating rate of 10.50%, 50 bp cheaper than earlier floating rates.
ICICI Bank, the leader in auto finance, on Monday launched floating rate repayment for auto and equipment loans that are 0.5% lower than the fixed-rate product. Though HDFC?s offer will be applicable for all loans disbursed before October 31 and only to new customers, it is awaiting the RBI?s credit policy announcement in the third week of October to decide on broader relief on rates.
Other institutions like ICICI Bank and State Bank of India may follow HDFC?s move. IDBI Bank has already reduced its fixed-rate home loans by over 100 bps.
An ICICI Bank spokesperson said that the bank was yet to decide on reducing home loan rates. After the Fed rate cut, bankers expect a softer rate regime in the RBI?s review of annual credit and monetary policy, but apprehend a hike in CRR to suck out liquidity arising from the central bank?s intervention to check the rupee?s rise. Renu Sud Karnad, executive director, HDFC, said, ?Historically, we have maintained a predetermined spread and have always believed in passing the benefits on to customers.?
ICICI Bank?s floating rate is linked to the floating reference rate, the benchmark used by the bank for pricing floating rate loans to retail customers, said the bank in a statement.
