The battle to gain market share in the home loan segment has intensified. ICICI Bank, the largest private sector lender in the country, is the latest to pare its housing loan rates. Its earlier revision of these rates was in April.
The move comes after most state-run lenders, including the largest of these, State Bank of India (SBI), reduced their mortgage rates to propel slowing credit demand. ICICI’s decision is part of its festive season offer and valid for sanctions till December 31. Existing customers can avail the benefits by visiting their branches and paying a small fee.
ICICI is to now charge a floating rate of 10.25 per cent on housing loans up to Rs 30 lakh, instead of the earlier 10.5 per cent. For loans between Rs 30 lakh and Rs 3 crore, its floating rate is now 10.5 per cent. Earlier, it charged a floating rate of 11 per cent for home loans between Rs 30 lakh and Rs 75 lakh, and 11.5 per cent on loans above Rs 75 lakh.
| HOME LOAN RATES (Rate of interest in %) | |||
| Bank | Below Rs 30 lakh | Between Rs 30-75 lakh | Above Rs 75 lakh |
| State Bank of India | 10.00 | 10.15 | 10.15 |
| ICICI Bank | 10.25 | 10.50 | 10.50* |
| Punjab National Bank | 10.50 | 10.50 | 10.75 |
| Bank of Baroda* | 10.50 | 10.75 | 10.75 |
| Canara Bank | 10.75* | 10.75 | 10.75 |
| HDFC | 10.25 | 10.50 | 10.50 |
| Source: Website | |||
| Note 1: ICICI Banks rate of interest is for loans up to Rs 3 crore and the offer is valid till December 31 Note 2: Bank of Baroda’s offer is applicable up to November 30 Note 3: Canara Bank offers home loans at 10.5 per cent up to 30 lakh for repayment period up to 10 years. Rates mentioned above are for repayment period above 10 years | |||
Home loans above Rs 3 crore would continue to attract a floating rate of 11.5 per cent under the new offer. The bank has made similar revisions for home loans with a fixed rate of interest for one and two years. For a three-year fixed rate home loan, the revised interest is 10.5 per cent for loans up to Rs 30 lakh and 10.75 per cent for Rs 30 lakh to Rs 3 crore of loans.
SBI had cut its home loan rates in early August, after the Reserve Bank of India (RBI) reduced the Statutory Liquidity Ratio (the proportion of liabilities banks are required to maintain in the form of cash or approved securities) requirement for banks. SBI followed this with a 25 basis points reduction in its base rate earlier this month, leading to a further decline in its housing loan rates. This was after RBI's decision to cut banks’ Cash Reserve Ratio (the amount of funds banks are required to keep, interest-free, with the central bank).
SBI is currently offering home loans up to Rs 30 lakh at a 10 per cent floating rate. Above Rs 30 lakh, the floating rate is 10.15 per cent.
The country's largest housing finance company, Housing Development Finance Corporation, is offering home loans up to Rs 30 lakh at 10.25 per cent and for loans above Rs 30 lakh it is charging 10.5 per cent.
Analysts say banks' credit growth this financial year will be primarily driven by retail loan demand, as companies are still wary of borrowing money at high cost in the current uncertain economic environment.
