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Cheaper Home Loans by PSU Banks

Saturday, May 2, 2009

Recently, state-run banks announced to offer cheaper loans rates on the home loans for first five years. The offer is for upto Rs 30 lakh on 9.25%. Currently, this offer is only for Rs 20 lakh on 9.25% interest rates by public sector banks but the scheme will open till 30th June 2009.

After restructuring banks loan slabs the special offer is available for Rs 30 lakh according to the executives. For instance, Corporation bank has replaced Rs 5-20 lakh loan with new slab of up to Rs 30 lakh.

JM Garg who is the chairman and managing director of banks said with ET, “We are working on restructuring of slabs for home loans to bring down the lowest slab to Rs 30 lakh. We find that 75 % of the demand for home loans was in this segment. There is further room for interest rate cuts and our next asset liability committee is to take a call.” It means the loan amount interest rate 9.25% will be only for first five year on the amount of Rs 30 lakh and further will be lowered.

Kamlesh Rao who is the executive vice-president of Kotak Mahindra said about it, “While home loans in the sub-30 lakh category industry is seeing a higher growth of around 10-15%, the Rs 30 lakh plus category is showing a growth of 5-10%.” For the Rs 30 lakh loan amount state-run banks charge 9.75-10%.

For the further, it has been announced that monthly payment on 20 years loan amount of 30 lakh would drop about Rs 500 on cut of every 25 basis interest rates.

IBA (Indian banking Association) has offered some special interest rates also to attract the customers. Upto 5 lakh loan amount PSU banks offer maximum interest rate of 8.5% for the first one year.

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