PSU banks cut home loan rate, owning a house in India now closer to reality

December 15th, 2008 - 3:09 pm ICT by ANI  

New Delhi, Dec.15 (ANI): The great dream of most Indians is to own a house and that is now close to reality.
With public sector banks announcing a cut in interest rates for home loans, the middle class in the country can think more seriously about having a roof over their heads.
The Indian Bank Association (IBA) has announced that home loans upto Rs five lakh would be given a maximum interest rate of 8.5 per cent, while those between Rs 5-20 lakh would be offered at 9.25 per cent.
Besides that, the banks have said that they will not charge processing fees and pre-payment charges for loans upto Rs 20 lakh, and would also provide free insurance cover.
In accordance with the stimulus package announced by the Government earlier this month, State Bank of India (SBI) chairman O P Bhatt said: The interest rate under the two schemes could come down, but would not go up beyond the threshold limit of 8.5 and 9.25 per cent for a five year period.
The offer under the package would be till June 30,2009, and after the lock-in period of five years the borrowers could look in for free or floating rates that could change in accordance with market conditions, Bhatt said adding, the public sector banks would give the loans at a margin of 10 per cent up to Rs 5 lakhs and 15 per cent for loans between Rs 5 lakh and Rs 20 lakhs, and in either case, banks would offer free insurance cover.
Now that the leading public sector bank has announced the freebies it has to offer, private banks such as ICICI and HDFC, are favourably inclined to cut their rates too.
Decision would be taken after ascertaining whether PSU banks are getting any government subsidy for implementing the package, a source said.(ANI)

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