Month: September 2012

Banks to provide 1% interest sop for home loan upto Rs 15 lakh

18 Sep 2012, PTI.

MUMBAI: Reserve Bank today asked banks to provide one per cent interest subsidy to home loans of up to Rs 15 lakh as announced by the government.

The interest subvention scheme has been liberalised with effect from 2011-12 by extending it to housing loans up to Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh, RBI said in a notification.

The scheme has since been extended by Government of India and will remain in force up to March 31, 2013, it said.

A Budgetary provision of Rs 400 crore has been made under the scheme for the year 2012-13 by Government of India, it said.

The Union Cabinet chaired by Prime Minister Manmohan Singh approved the scheme in July.

The limit of subsidy for an individual borrower would be Rs 14,912 for a loan of Rs 15 lakh, and Rs 9,925 for a loan of Rs 10 lakh. The extended scheme will benefit all housing loans availed in the current financial year.

The National Housing Bank is the sole nodal agency for implementation of the scheme for banks, Regional Rural Banks and housing finance companies.

Axis Bank to waive 12 home loan EMIs for timely repayment

06 Sep 2012, ET Bureau.

MUMBAI: Axis Bank has opened a new front in the fast-growing home loan market by promising to waive the last 12 equated monthly instalments , or EMIs, if repayments are done on time, a move that could prevent customers from shifting to rivals offering lower rates and help the bank grab market share from them.

The bank, which aims to raise its retail loan portfolio to about 30 per cent of total from less than a fifth now, said this offer is available for those who borrow under floating rate of interest and where payments are on time. “The idea is also to check the churn in the home loan portfolio,” said Jairam Sridharan, head consumer lending and payments at Axis Bank. “With no pre-payment penalty, customers are shifting loans to take advantage of the interest rate arbitrage between banks. This product will also help us retain customers.”

India’s home loan market, estimated at more than Rs 4 lakh crore, is the most competitive segment for lenders with banks and mortgage company HDFC turning aggressive with offers . SBI and HDFC fought bitterly with teaser rates to capture market share. Also once-dominant ICICI Bank is now crawling back after reducing exposure after the 2008 credit crisis. “SBI has been very aggressive in the home loan space. There has been flight of customers from other banks to SBI,” said an analyst not wanting to be identified. “HDFC has a 17 per cent market share; State Bank of India has a 19 per cent market share,” he said.

Axis, a predominantly corporate and infrastructure focused lender, is attempting to balance its portfolio as some investors question the wisdom of a skewed portfolio. Although there are many segments in retail such as auto, personal and other loans, the attention is on home loans since the default rates are the lowest. In a country where borrowers prepay loans, this may not be such a great offer. But Axis bankers say that with sky-high real estate prices, there’s hardly any scope for pre-payments. “With the appreciation in the property prices, it is becoming tough for customers to prepay their home loans. Most home loan borrowers are now in their early 30s. To incentivise customers to maintain good credit behaviour, we have launched this,” Sridharan said.

The Axis Bank product would be offered at the same rates as the regular loan products and would be applicable to new customers under floating rate option. The EMI waiver would be offered to all loans with an initial tenure of 20 years or more and those that have crossed 15 years with Axis Bank. Any customer who pays EMIs on time would be automatically eligible for the benefit. A customer taking a Rs 50 lakh home loan at 11 per cent floating rate, the EMI per lakh of loan size would be Rs 1,032. If the customer takes a ‘happy ending’ home loan, the EMI waiver would be worth as much as Rs 6.19 lakh.

IDBI Bank, OBC cut interest rate on home loans by 0.25 pc

NEW DELHI: Two public sector banks, IDBI Bank and Oriental Bank of Commerce, today reduced interest rate on home loans by up to 0.25 per cent.

“While the floating interest rates in respect of all loans have been reduced by 0.25 per cent subject to Base Rate, the fixed rate on home loans has been reduced to 11.50 per cent for all loans for a period of 3 to 5 years,” IDBI Bank said in a statement.

The base rate or the minimum lending rate of IDBI Bank stands at 10.50 per cent.

Oriental Bank of Commerce (OBC) has reduced interest rates on home loans and vehicle loans by 0.25 per cent and 0.4 per cent respectively.

Home loan and vehicle loans shall now be available at reduced rate of as low as 10.65 per cent and 11 per cent respectively, OBC said in a statement.

The new rates of IDBI Bank would be effective from tomorrow, while revised rates of OBC will be applicable from September 10.

IDBI Bank has also reduced processing fee by 50 per cent or more on home loans, it said.

Further, IDBI Bank said, the bank has also effected certain changes in card rates applicable to some of the allied home loan products.

However, the bank did not give details of other allied home loan products.

The existing 0.25 per cent concession to loyal customers shall continue as announced earlier, OBC said, adding for the loyal customers the home loan shall now be available as low as 10.40 per cent while vehicle loan at 10.75 per cent.

Processing fee on home loans has also been waived till December 31, 2012, it said.

Several other banks including State Bank of India, Corporation Bank, Dena Bank and Indian Bank too had recently reduced interest rates on home loans.

Axis Bank rolls out new home loan scheme with EMI waiver

5 Sep 2012, ET Bureau.

MUMBAI: Private sector lender Axis Bank has launched a new housing loan scheme that will waive off the last 12 equated monthly installments (EMIs) for borrowers who have been diligently repaying their loan.

Termed Happy Ending Home Loan, the scheme will offer interest rates applicable under the floating loan option. The EMI waiver will be offered to all home loans that have an initial tenure of at least 20 years and cross their 15th year with the bank.

In other words, if you decide to switch your lender or prepay your loan before the completion of this 15-year-period, you will not be entitled to this benefit. Also, as mentioned earlier, only those borrowers who have been discharging their EMI commitments on time will be eligible for the waiver.

According to an official release from the bank, a borrower with a floating-rate home loan of Rs 50 lakh and an interest rate of 11% will be able to save up to Rs 6.19 lakh in form of the waiver.

All other terms and conditions will be similar to those of regular home loans.

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