Mortgage lenders move to match SBI rates

The action in the home loans market seems to be hotting up with many banks and housing finance companies moving to match the competitive schemes unveiled by the country’s largest lender, State Bank of India.

The latest to join the fray is LIC Housing Finance (LICHF). The country’s second-largest mortgage player has cut floating rates by 50 basis points (bps) from 9.25 per cent to 8.75 per cent for loans of Rs 30-75 lakh.

For those who have opted for the three-year Fix-o-Floaty Scheme — which allows customers to move from fixed to floating rates — the rates have been reduced from 9.5 per cent to 8.90 per cent. The new rates are effective from August 1, 2009. “We want to position ourselves favourably among high-end customers. I don’t think anyone else is offering such competitive rates for loans up to Rs 75 lakh,” said Director and Chief Executive Officer RR Nair.

Last week, SBI had slashed rates to attract customers across income segments. Now, loans from SBI are available at an interest rate of 8 per cent for the first year and 8-9 per cent for the next two years depending on the size of the scheme. Yesterday, India’s largest mortgage lender, Housing Development and Finance Corporation (HDFC), reworked its home loan slabs, resulting in a 50 bps cut from 9.5 per cent to 9 per cent for loans of Rs 30-50 lakh.

In mid-July this year, HDFC had cut interest rates on loans of up to Rs 15 lakh by 50 basis points to 8.75 per cent.

The country’s second largest public sector lender, Punjab National Bank (PNB), has unveiled its ‘PNB Festival Season Bonanza Offer 2009’ under which housing loans up to Rs 30 lakh are available at a discounted rate of 8.50 per cent under the fixed interest rate option across all repayment tenors. In addition, there are no processing and documentation charges.