The home loan war is intensifying. Taking cues from State Bank of India (SBI), ICICI Bank and HDFC on Monday slashed lending rates for affordable housing loans to match them with SBI’s. HDFC and ICICI Bank would now offer loans up to Rs 30 lakh for salaried customers at 8.35 per cent for women and at 8.40 per cent for others.
With corporate credit demand remaining muted, lenders are competing in the affordable housing segment, which is seeing a good traction after the government announced a series of incentives. As per the government’s definition of affordable housing, home loans up to Rs 30 lakh qualify for affordable housing. Over and above the reduced rates, an eligible home loan customer can also avail of an interest subsidy of Rs 2.67 lakh under the Pradhan Mantri Awas Yojana.
“HDFC has reduced its rate on home loans up to Rs 30 lakh to 8.35 percent for women salaried borrowers and 8.40 per cent for others. For loans between Rs 30 lakh and Rs 75 lakh, the rate now stands at 8.50 per cent, and for those above Rs 75 lakh, it is 8.55 per cent,” HDFC said in a statement.
HDFC’s rate prior to the latest reduction stood at 8.65-8.70 per cent for loans up to Rs 75 lakh, and 8.70-8.75 per cent for those above.
ICICI Bank said that it has slashed home loan rates by up to 30 basis points and its new rates will be effective from May 15, 2017 for new borrowers. Self-employed borrowers could avail of affordable loans at 8.55 per cent from ICICI Bank while for women the rate is 8.50 per cent. Further, borrowers can also choose to link their home loans with ICICI Bank’s marginal cost of funds based lending rate (MCLR) for six months or to one year linked MCLR rate. Loans are available with floating as well as 2/3 year fixed interest rate, said the Bank.
Chanda Kochhar, MD & CEO, ICICI Bank, said, “With this announcement, customers of economically weaker section (EWS) and low income group (LIG) can avail of the dual benefit of low interest rates from us and the credit-linked subsidy under the Pradhan Mantri Awas Yojana. I believe that this initiative, along with the bank’s expansion of home loan business in tier II cities, will empower a larger section of customers to realise the dream of owning a new home.”
Effective May 9, SBI too is charging salaried women borrowers 8.35 per cent for home loans up to Rs 30 lakh as against 8.60 per cent (a 25 basis points reduction). On the same lines, salaried male borrowers would get home loans up to Rs 30 lakh at 8.40 per cent per annum as against 8.65 per cent per annum earlier. For loan above Rs 30 lakh to Rs 75 lakh, the bank will charge 8.50 per cent, down by 10 basis points. While for loans above Rs 75 lakh, the bank is not offering any discount & will continue to charge 8.65 per cent. SBI reduced the rates for non-salaried customers offering 8.50 per cent per annum for loans up to Rs 30 lakh compared to 8.70 per cent earlier.
SBI is a major player in home loans segment with 25 per cent market share. Going by RBI’s definition of affordable housing, around 80 per cent of SBI home loan portfolio falls under affordable housing. The total home loan portfolio of SBI as on Dec 2016 was around Rs 2 lakh crore growing at 16-18 per cent. As per the central bank, affordable segment means in the non-metros the loan amount should be up to Rs 40 lakh for property value of Rs 50 lakh, and in the metros the loan amount would be Rs50 lakh for the property value of Rs 65 lakh.
