Source: Times Property in The Times of India, Bangalore Nov 01, 2011
With potential home buyers dragging their feet, banks are trying to target them with attractive limited period home loan products.
On offer are discounts on processing fee, longer loan tenures, insulation from interest rate increases for a few years, and short-term rate cuts.
SBI has done away with the processing fee of 0.25% for loan sizes up to Rs 1 crore. PNB, Dena Bank and Corporation Bank are also offering discounts by a few basis points on the processing fee.
Canara Bank has reduced interest rates by 50 bps across all home loan slabs as part of their festive offers.
SBI home loans can now be taken for a tenure of up to 30 years. Previously, you couldn’t take a loan for more than a 20-year tenure.
ICICI Bank is offering a fixed rate of interest - ranging from 10.75% to 11.75% depending on the amount of loan - for the first two years of the home loan tenure. The rate will rise subsequently to the then prevailing level and become a floating rate. HDFC has a similar scheme, with a fixed rate for the initial three or five years. Axis Bank's Nishchint scheme offers 11.75% fixed interest rate for a loan term up to 20 years.
Such schemes are attractive in a rising interest rate regime. But given the growing belief that rates are near their peak, customers may not want to lock in their money at the current high rates. "Many of our clients feel interest rates will start coming down soon. So they prefer floating rates," said Yogesh Gupta, director in financial planning firm Sykes & Ray.