Axis Bank offers 20-year fixed home loan rate of 10.4%

Axis Bank today launched a 20-year home loan scheme at a fixed rate of 10.40 per cent for loans of up to Rs 50 lakh.
The limited period offer is only for affordable housing segment for loan size of up to Rs 50 lakh. The new offer is 25 bps, or 0.25 per cent, above its base rate (below which it cannot lend), currently pegged at 10.15 per cent.
Axis Bank President for Retail Lending Jairam Sridharan told PTI that "it is a question of principles, whether to bear the interest rate risks as an institution or pass it on to the customer. We felt we should give the customer a choice."

The bank customers can also switch from fixed to a floating interest rate plan by paying a fee or go for a foreclosure at fee of 2 per cent of the outstanding principal amount, he said.
Asked about the Reserve Bank abolishing pre-payment fees for mortgage loans, Sridharan said the RBI rule is applicable only for floating rate products and not fixed rate loans.
On the efficacy of the product, especially in a scenario where interest levels are expected to drop, he cited historical data about swings in rates over the past decade, and said over a longer-term of more than six months, no one knows how the rates will move.

The move indicates a softening interest rate regime, though the RBI has not cut rates in the past 15 months. However, there had been a 60-70 bps fall in call money market rates since July and bonds are trading below the repo rate of 8 per cent.