Even as the central bank is expected to hike rates one more time, banks have started offering discounts on home loans. Lenders say that this development is an indicator that demand for home loans is easing.
On Wednesday, IDBI Bank announced special rate home loans and auto loans for the festive season. In terms of the scheme, borrowers can avail of home loans up to Rs 25 lakh at 10.75%, Rs 25 lakh to Rs 30 lakh at 11% and loans between Rs 30 to Rs 75 lakh at 11.25%. The bank has also decided to offer concession of 100 bps in rate of interest for all segment of loans as well as 100% waiver of processing fee for auto loans. The offers are applicable to the new loans sanctioned between October 15, 2011 to December 31, 2011.
Last week, Dena Bank reduced its lending rate on home loans and auto loans by 25 basis points. The bank also reduced the processing fees on these loans by 50%. With the concession loans up to Rs 25 lakh are available at 11.15%. The bank also offers loans up to 5 years at 10.7%. "If there is a further increase in interest rates the demand for home loans will drop. Already there are not many people seeking home loans" said Amitabh Chaturvedi, CEO, Dhanlaxmi Bank.
Last week, SBI chairman Pratip Chaudhuri said that the bank had decided to hold lending rates even after the Reserve Bank of India's rate hike last month.