It’s a good time for those planning to avail of a home loan. Home loan rates have come down and new slabs have been introduced to make it easier for people to buy the house of their dreams. Banks have slashed interest rates on priority sector home loans (of up to Rs 20 lakh or Rs 2 million) till June 30, 2009.
All public sector banks have agreed to offer home loans up to Rs 500,000 at a interest rate of 8.5 per cent, between Rs 500,000 and Rs 20 lakh at 9.25 per cent. These banks will not charge any processing fees and pre-payment charges for loans up to Rs 20 lakh, and would also provide free insurance cover.
Public sector banks are offering a margin money requirement of 10 per cent for a loan amount of Rs 500,000 and 15 per cent for loans between Rs 500,000 and Rs 20 lakh.
Earlier, the margin money varied from 20-25 per cent. Existing customers will also be able to enjoy the benefits of the new floating rates from the following quarter from the date of the revised rates.
Housing Development Finance Corporation (HDFC) rules the home loan market with a 40 per cent market share, followed by ICICI Bank (with 25 per cent share), and State Bank of India (SBI) with 18 per cent of the market share.
Public sector banks hold less than 30 per cent of the market share. Loan disbursements during the six-month period ending September 30, 2008 amounted to Rs 17,788 crore (Rs 177.88 billion) as against Rs 14,275 crore (Rs 142.75 billion) during the same period in the previous year, representing an increase of 25 per cent.For home loans up to Rs 5 lakh (Rs 500,000), SBI’s floating rate is 8.5 per cent (10 per cent would be the margin money). Home loans between Rs 5 lakh and Rs 20 lakh is 9.25 per cent (15 per cent is margin money).
Home loans between Rs 20 lakh and Rs 30 lakh (Rs 2-3 million) will have an interest rate of 9.75 per cent for 5 years, 10 per cent for 5-15 years and 10.25 per cent for 15-25 years.
Loans above Rs 30 lakh would be charged (floating interest rate) at 10.25 per cent (5 years), 10.5 per cent (5-15 years) and 10.75 per cent for (15-25 years).
Fixed loans for Rs 30 lakh would be charged at 11.25 per cent and above Rs 30 lakh would be 12.15 per cent. The tenure would be ten years.
There would no pre-payment penalty and no processing fee for loans up to Rs 20 lakh.