Thursday, October 8, 2009

Banks sweeten home loans with festival offers

In an attempt to shore up credit demand, banks are rolling out festival schemes on home loans ahead of Diwali. Deals include teaser rates for initial years, with some lenders giving an option to shift to either fixed or floating rates in subsequent years:

Offers are coming largely from PSU banks!

Lenders like Canara Bank, Bank of Maharashtra (BoM) and Dena Bank are offering fixed-rate loans for the first five years, and subsequently, linking the loans to their prime lending rates. While others like Bank of India are offering fixed-rate loans for the first two years. India’s largest bank SBI is offering fixed rates for the first three years. The competition to gain market share
has resulted in a small price war.

On Thursday, Development Bank of Credit introduced a fixed rate of 7.95% for the first year — the lowest, at least, for the first year. From the second year onwards, the home rates will be linked to floating rate loans. BoM and Dena Bank offer a fixed rate of 8% for loans up to Rs 30 lakh in the first two years, while Canara Bank offers 8% in the first year for Rs 30 lakh and SBI offers 8% for the first five years for loans up to Rs 5 lakh.

8.75%

Now, builders and lenders are making a fresh pitch to push sales during Diwali through limited period offers. Interestingly, the offers are coming largely from PSU banks. HDFC, ICICI Bank and LIC Housing have not yet announced any festival offers, but announcements closer to Diwali are not ruled out either. The three lenders charge interest at 8.75% on their lower-end loans.

To read more, please, visit The Economic Times

Related Stories:

1) 7.95%! Interest on home loan dips further!!

2) Inflation worry may weigh heavy on rates

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