More banks have started coming out with dual-rate home loans and other freebies like festival rate discounts in the sluggish home loan market.
After ICICI Bank and HDFC, public sector IDBI Bank on Wednesday said it would give a discount of 25-50 basis points (bps) to prospective floating home loan customers and offer a fully floating rate or a combination of fixed and floating rates during the festive season.
“All new borrowers would be given an option of either fully floating rate or a combination of fixed and floating rates. The processing fee for loan amounts upto Rs 25 lakh has been waived. The bank has also reduced the existing floating home loan rates by 25-50 bps,” IDBI Bank said in a statement.
For home loans up to Rs 25 lakh under the fixed-floating combination scheme, the rate will be 10.75 per cent for one year option and 11 per cent for first two years.
After that period, the floating rate will be 10.75 per cent. For loans between Rs 25 lakh-30 lakh, it will be 11 per cent for one year, 11.25 per cent for two years and floating rate of 11 per cent.
For loans between Rs 30 lakh and Rs 75 lakh, the rates will be 11.25 per cent, 11.50 per cent and 11 per cent respectively.
IDBI Bank has also decided to offer concession of 100 bps in rate of interest for all segment of loans as well as 100 per cent waiver of processing fee for auto loans. “All the offers are applicable to the new loans sanctioned between October 15, 2011 to December 31, 2011,” it said.
The ball was set rolling by ICICI which launched home loans with the option of having a fixed rate for either the first year or the first two years. The fixed rate for one year is between 10.5 per cent and 11.5 per cent, depending on the loan amount, and for two years, it is 10.75 per cent to 11.75 per cent.
HDFC also unveiled products with fixed and floating rates — the plans offer fixed rates for the first three (10.75-11.75 per cent) or five years (11.25-11.75 per cent). LIC Housing Finance has come out with a fixed rate of interest for the first five years and on floating rate thereafter, with the interest rate being in the range of 11.15-11.65 per cent.
Axis Bank recently launched a new home loan product offering a lifetime fixed interest rate of 11.75 per cent for 20 years. Under the scheme, the bank will offer home loan to eligible buyers up to 85 per cent of loan-to-value for debt up to Rs 20 lakh and 80 per cent loan-to-value for borrowings above Rs 20 lakh, with a pre-payment charge of 2 per cent of the outstanding amount.
Dena Bank and State Bank of India dropped interest rates on home loans by 25 basis points, while Central Bank of India and Bank of India offered home loans at their base rate of 10.75 per cent.
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