)
Housing Development Finance Corporation (HDFC) has launched fixed-rate home loans for 10 years, for loans sanctioned between December 22 and January 2015. The first disbursement should be on or before March 21, 2015.
The country’s largest housing finance company also cut deposit rates by up to 15 basis points (bps) on deposits of varying maturities.
Under the fixed-rate option, Trufixed, customers can avail a home loan at a fixed interest rate for two to 10 years. Thereafter, the loan will switch automatically to HDFC’s Adjustable Rate Home Loan (ARHL) product without any charges, it said.
These options are for customers seeking to lock-in their home loan interest rates and not wanting to take a risk on interest rates for a considerable period.
Currently, HDFC offers fixed rate loans for two and three years. The interest rates are between 10.15 per cent and 10.35 per cent. For the 10-year fixed rate option, the rates are between 10.25 per cent and 10.50 per cent.
After completion of the fixed rate period, the loan will switch to HDFC’s ARHL product, linked to HDFC’s Retail Prime Lending Rate (RPLR). The rate of interest applicable during the ARHL period of the loan will depend on the RPLR at the time of the switch of the loan. The floating rates on the switch to ARHL, based on current RPLR for loans up to Rs 75 lakh, is 10.15 per cent. For loans above Rs 75 lakh, it is 10.5 per cent.
With the Reserve Bank of India likely to cut interest rates in its monetary policy review in March, lending rates are likely to come down. In such a scenario, locking into a long-term fixed-rate loan now might not be very useful. But those who do not want any uncertainty in their budgets could look at a fixed rate product.
Earlier this month, Axis Bank had launched a fixed ratehome loan scheme for a tenure of 20 years, at an interest rate of 10.4 per cent. The maximum loan under this is Rs 50 lakh in metro cities and Rs 40 lakh in others. Axis also offers a fixed rate loan for higher amounts, at 11.75 per cent.
ICICI Bank, the country’s largest in the private sector, also offers a fixed rate for loans up to 10 years, with interest rates of 10.25 to 10.5 per cent, depending on the amount. PNB Housing Finance offers different fixed periods of three years, five years and 10 years, with interest rates varying between 10.5 per cent and 11.5 per cent.
