The home loan aspirants have another reason to cheer because the interest rates offered by the private sector lenders also have started falling. The largest private sector lender, ICICI Bank has cut the interest rates on floating home loans for new borrowers by 25 to 50 basis points.
As per the bank's spokesperson, loans up to Rs 20 lakh will now come at an interest rate of 9.75% against the earlier rate of 10% where as interest rates on loans between Rs 20 lakh and Rs 30 lakh have been cut by 50 basis points to 10%. At the same time, home loans above Rs 30 lakh will be offered at 11.5% against the present rate of 12%.
The revised rates of ICICI are applicable from immediate effect and are only valid for the new borrowers. The home loan rates for the existing borrowers have not been reduced by the bank. The bank's spokesperson said that the bank is yet to take a decision on reducing its floating reference rate and the interest rates on existing home loans would only be cut once the floating reference rate is lowered by the bank. Presently the floating reference rate of the bank stands at 13.75%.
ICICI has also cut the interest rates on fixed home loans by 100 basis points to 15%. However there are hardly any home loan aspirants that prefer fixed rate home loan. The benchmark prime lending rate (BPLR) of the bank has also stayed untouched at 16.75%.
The rate cut announcement by ICICI came two days after the Reserve Bank of India (RBI) slashed its key policy rates by 50 basis points. Following the RBI's move many banks reduced their interest rates in order to pass on the benefits to the customers.
PSU banks such as Bank of Baroda (BoB), Union Bank of India, UCO Bank have all reduced their BPLR by 50 basis points.
Canara Bank also announced a cut in their home loan rates and fixed it at 8.25% for the first year of the tenure. Last month, SBI announced a home loan scheme where interest rate for the first year was fixed at 8%.
Now that the private sector leader has taken a step, others are likely to take cue and announce rate cuts soon. However, the rates are expected to be applicable only to new customers and the existing customers will continue to be burdened with higher rates that hover around 13% to 14%.