The National Housing Bank (NHB) has overhauled its refinance scheme for scheduled banks. In the backdrop of falling interest rates, it has for the first time decided to offer home loan refinance at floating rates to banks.
In order to attract banks which are themselves facing a liquidity glut into taking refinance from it, NHB has also slashed the fixed rate of refinance by up to 200 basis points in respect of direct loans extended by them.
NHB, which is not only a regulator for housing finance companies (HFCs) but also provides refinance to banks/HFCs against housing loans provided by them, is offering floating rate refinance for 2-15 years in respect of direct loans extended by banks. For a loan of up to Rs 10 lakhs, the floating rate is 6.90 per cent.
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The rate for a loan above Rs 10 lakhs and up to Rs one crore is 7.10 per cent. The best of borrowers (seven star) can now borrow at this rate.
However, as the credit rating of a bank goes down, the mark-up over the floating rate goes up. This mark-up could vary between 40-85 basis points.
The floating rate refinance is being offered in view of the popularity of floating rate home loans with customers who want to take advantage of the falling interest rates.
The institution has drastically brought down the number of slabs with regard to loan size from seven to two