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ICICI slashes home loan rates by 0.25 per cent

Jul 06, 2007 04:16 PM IST Business Business
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New Delhi: A slight breather has come for those seeking to apply for a home loan. ICICI Bank has cut its floating rates on home loans by upto 50 basis points or 0.5 percent. On fresh loans for upto Rs 20 lakh the rates have been slashed by 25 basis points or 0.25 percent. However, the rate cut is just a correction and it is unlikely that other banks will follow suit. “ICICI Bank's rate cut is more of correction. There is no genuine trend in the market that shows that home loan rates are going to come down. Home loans are certainly not going to soften. ICICI has reduced its rates by a quarter percent but it still is higher than those offered by HDFC,” said executive director HDFC, Renu Sood. “Its not a precursor to the markets,” she added. Over the previous one-month, most banks had hiked the EMIs and interest rates on home loans to cope with the increased pressure from RBI. “There are some people who are still waiting and watching expecting that property markets will soften, given that the property demand has gone low. However, that is unlikely to happen. Home loan rates and EMIs will continue to soar,” she added. HDFC had recently cut loan rates for new borrowers as a promotional offer. A 25-basis-point reduction in the lending rate would bring down the equated monthly installments on a Rs 10-lakh loan by Rs 160. “As part of the monsoon offer, a customer applying for home loan up to Rs 50 lakh between June 18 and July 15 will be offered a variable interest rate of 11 per cent per annum instead of 11.25 per cent. HDFC rates are slightly below rates offered by its rival ICICI Bank. With this reduction, some categories of loans from HDFC are cheaper than ICICI Bank loans by one percentage point. There will, however, be no reduction in the fixed-rate loans offered by HDFC.