Home loans today pierced the interest rate floor of 8 per cent that the State Bank of India had set in February. GIC Housing Finance, a subsidiary of state-owned General Insurance Corporation of India (GIC), today offered home loan up to Rs 1 crore at a festive season discount rate of 7.95 per cent, making it the lowest in the country.
Although the details of the new scheme offered by GIC Housing Finance are sketchy, it is learnt that the interest rate of 7.95 per cent will be valid for a period of six months. After this period, the interest rate will be reset to the then prevailing base lending rate.
In addition to this scheme for the festival season, the company has launched a loan scheme carrying interest at 8.95 per cent per annum fixed for a period of two years. GIC Housing Finance, which has a small presence in the home loan segment dominated by giants like HDFC, the State Bank of India (SBI) and ICICI Bank, made the scheme more attractive by offering free accidental death insurance cover and free property insurance cover to the loan applicants.
It was the SBI which took the lead in spicing up home loans by offering an 8 per cent interest rate (for the first year) in February. In August, it bettered the deal by offering loans up to Rs 5 lakh at a fixed rate of 8 per cent for five years. It also offered to charge 8 per cent for the first year on loans up to Rs 50 lakh and cap them at 8.5 per cent in the second and third years. Besides, it waived processing fees.
Though GIC Housing Finance’s interest rate of 7.95 per cent is below SBI’s, it must be noted that the reduced rate is only valid for a period of six months against one year for the SBI. In the case of the State Bank, individuals can borrow up to Rs 5 lakh under the SBI Hi-Five Home Loan scheme at an interest rate of 8 per cent fixed for a period of five years.
Meanwhile, IDBI Bank cut its new home and auto loan rates by 25 to 50 basis points effective from October 1. With this, the new rates for home loans up to Rs 30 lakh will be 8.75 per cent as against the existing 9 per cent. Home loans between Rs 30 lakh and Rs 50 lakh will attract a rate of 9 per cent (9.5 per cent), while those above Rs 50 lakh will be priced at 9.25 per cent (9.5 per cent).
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