Following SBI, two leading private lenders ICICI Bank and HDFC Ltd on Monday slashed interest rate by up to 0.3 percent for loans of up to Rs 30 lakh to promote affordable housing. The move is in keeping with the government's vision of providing homes for all by 2022.
New home loans rates for up to 30 lakh for women will be 8.35 percent and for other others, 8.40 percent, mortgage lender HDFC Ltd said in a statement.
For home loans between Rs 30 lakh and Rs 75 lakh the interest remains unchanged at 8.50 percent for all borrowers. For home loans above Rs 75 lakh it is now 8.55 percent, from 8.75 percent for all, it said.
The new rates are effective from Monday and are expected to be followed other lenders as well.
Earlier in the day, the country's largest private sector lender, ICICI Bank too reduced interest rates by up to 0.3 percent for home loans up to Rs 30 lakh in its bid to boost affordable housing.
With this reduction, salaried borrowers can avail home loans at among the lowest rates in the industry, the country's largest private sector lender said.
Salaried women borrowers will get home loans at 8.35 percent and others at 8.40 percent, it said.
Last week, State Bank of India had reduced its affordable home loan rates by up to 25 basis points, offering a lower rate of 8.35 percent to new women borrowers.
With around 26 percent market share, SBI is also the biggest player in the home loan segment.
This move would be followed up by other lenders both in private and public sector space to stay in the competition.
With paring of rate, ICICI Bank said its customers taking home loans in the affordable segment will also have the option to select the type of interest rate.
In both these cases, the reduction in interest rates is 30 basis points from the previous rates.
They can enjoy the benefit of floating interest rate or a fixed interest rate for the initial two/three years followed by floating rate.
"Further, borrowers can also choose to link their home loans with Marginal Cost of funds-based Lending rate MCLR-6 Months or I-MCLR-1 Year. The bank is the first to offer such flexibility to customers. The reduced rate will be effective from May 15, 2017 for new borrowers," it said.
ICICI Bank MD Chanda Kochhar said the bank is committed to supporting the government's vision to provide housing for all by 2022.
"In line with this commitment, we have reduced the home loan interest rates for the affordable housing segment. With this announcement, customers of Economically Weaker Section (EWS) and Low Income Group (LIG) can avail the dual benefit of low interest rates from us and the Credit Linked Subsidy under the Pradhan Mantri Awas Yojana," she said.
This initiative, along with the banks expansion of home loan business in tier II cities, will empower a larger section of customers to realise the dream of owning a new home, she added.
According to the government's scheme, those families with husband, wife and unmarried children, who do not own a pucca house, can avail of the benefits of the Housing for All scheme launched by prime minister Narendra Modi in June 2015. The scheme is targeted at economically weaker sections with an annual income of Rs 3 lakh, low income group with an annual income betweek Rs 3 lakh and Rs 6 lakh,
As per the initial plan, the scheme will cover the entire urban area consisting of 4,041 statutory towns with initial focus on 500 Class I cities. It was to be implemented in three phases, with the first phase during April 2015-March 2017 covering 100 cities to be selected from states and Union Territories; second phase during April 2017-March 2019 covering another 200 cities and third phase during April 2019-March 2022 covering all other remaining cities.
The target beneficiaries include – economically weaker sections, low income group, middle income groups and higher middle income groups.
On December 31, Prime Minister Narendra Modi had announced interest subsidy of up to 4 per cent on loans taken in the new year under the Pradhan Mantri Awaas Yojana.
Modi, in his national address on New Year's eve, had also said 33 per cent more homes will be built for the poor under this scheme in rural areas.
Besides, in urban areas housing loans of up to Rs 9 lakh and up to Rs 12 lakh will receive interest subsidy of 4 per cent and 3 per cent respectively, while in rural areas loans up to Rs 2 lakh will get an interest subvention of 3 percent.
According to Union Minister for Urban Development, Housing & Urban Poverty Alleviation Venkaiah Naidu, the government has until now given approval for financial aid for 17.73 lakh affordable houses.
With inputs from PTI
Updated Date: May 16, 2017 08:30 AM