Lowered Home loan rates
The Union government is pushing state-owned banks to offer interest rates on housing loans up to Rs 20 lakh at pre-2004 levels. Now consumer can get home loan at low interest.This means consumers could get home loans at 7 to 8 per cent, 2 or 3 percentage points lower than the current market rate of 9.5 to 10.5 per cent. Public sector bankers indicated that they have received signals to lower pricing of home loans up to Rs 20 lakh.
Finance Secretary Arun Ramanathan is likely to meet some public sector bank chiefs for an action plan. The contours of the package are likely to be ready early next week. Apart from taking a direct hit in the form of an interest subsidy, the government is looking at bridging the cost of this scheme, the difference between the rate at which the loan is offered and the market rate, through refinancing from the Reserve Bank of India (RBI). By this move, home loans up to Rs 5 lakh may attract interest of around 7 per cent and those above Rs 5 lakh and up to Rs 20 lakh around 8 per cent, sources said. With interest subvention, the actual interest realization for banks may be around 10 per cent. So far, state-owned banks have reduced interest rates from as high as 11 to 12 per cent to 9.5 to 10 per cent. Deposit rates may fall further after RBI’s recent rate cuts. The average cost of funds for banks is 6 per cent now.
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Tags: Home Loans