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Money > Business Headlines > Report April 23, 2002 | 1340 IST |
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Housing finance firms set to snip rates anewParul Gupta & Sidhartha Interest rates on housing finance are set to move southwards with a host of banks and housing finance companies, including Punjab National Bank, Housing and Urban Development Corporation and Canfin Homes, set to reduce rates by 25-50 basis points. Others like ICICI Home Finance intend to follow a wait-and-watch policy. While PNB and Canfin Homes said they will charge lower rates from May 1, Hudco will decide the date for effecting the cut in its interest rate, which ranges between 11-11.5 per cent, after the Credit Policy next Monday. Hudco Chairman and Managing Director V Suresh said: "We will cut our housing loan interest rates immediately after the credit policy since we want to make our Hudco Niwas the most accessible and the most affordable scheme for customers." For those HFCs or banks which aren't effecting interest rate cuts immediately, the options are still open. As a leading housing finance player pointed out: "It is an extremely competitive market - our decision will depend on the incremental business and the number of customers we can get after the other players have cut rates." A few banks have already taken the lead in effecting a cut. These include State Bank of India, Corporation Bank and Indian Overseas Bank. While IOB has reduced the interest rate on loans up to Rs 2 lakh (Rs 200,000) to 10.75 per cent, Corporation Bank cut rates on loans up to Rs 25 lakh (Rs 2.5 million) with a tenure of up to 5 years to 10.5 per cent and to 11 per cent for loans up to Rs 2.5 lakh (Rs 2.5 million) but with a tenure of over 5 years. While a majority of housing loans have a tenure of 15 years, banks and some housing finance companies including Birla Housing Finance are targeting those who avail loans for a shorter duration. PNB will effect a 25 basis point cut for those availing a fixed interest rate loan with a five-year tenure, while rates for those availing loans with a tenure of 5-20 years would be 12 per cent, and for 20-25 years 13 per cent. At present, the interest rate slabs are 0-7 years (11.25 per cent), 7-20 years (12 per cent) and 20-25 years (13 per cent). Some like PNB Housing Finance, BHFL and Andhra Bank do not see any reason for cutting interest rates. "We want be in the race but not in a mad race," Andhra Bank chairman and managing director B Vasanthan said. ALSO READ:
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