Home Loan Balance Transfers welcomed by PSU Banks

PSU Banks have said that the home loan balance transfers from private sector banks and housing finance companies are welcome. The quality of assets is the main issue for Public sector banks regarding home loan transfers from their private sector counterparts.

Home loan balance transfer happens when there is a wide interest rate differential on home loans between two different banks. Currently this gap is very wide between the private and public sector banks.

Consider this: On a Rs 30-lakh home loan of 20 years, PSBs are currently charging a floating interest rate of about 9.25 per cent, while select private sector banks/HFCs are quoting an interest rate of 9.75-10.50 per cent.

These high interest rates are forcing the private sector bank customers to think of switching to the public sector banks for their home loans.

State Bank of India, has witnessed a tremendous rise in applications for takeover of home loans. For Andhra Bank too a large portion of its home loans has come from take over of loans from private sector banks. However, not all public sector banks encourage take over of loans due to the uncertainty and risk involved. If interest rates fall again, there is a possibility that the customer may shift his loan again. We do it (balance transfer), but only selectively.

LIC Housing Finance reduces home loan rates by 75bps

LIC Housing Finance Ltd today reduced interest rates for existing home loan borrowers by 75 basis points. The housing finance company said the cut was a result of a reduction in cost of funds. The company said the revised rates, the lowest in almost two years, would be effective from April 1.

Interest rates on home loans will now be between 10-10.50 per cent against 10.75-11.25 per cent earlier.

LIC Housing Finance, which competes against the likes of the State Bank of India, HDFC and ICICI Bank, has also announced a special rate of interest for customers opting for floating rate loans.

This rate reduction is the second such move by the company in the past three months.
It had earlier reduced the interest rates by 75 basis points for its existing home loan borrowers, effective from January 1 this year.

The new floating rate has been fixed at 8.75 per cent for loans up to Rs 30 lakh. For loans above Rs 30 lakh and up to Rs 75 lakh, interest rates will be 9.50 to 9.75 per cent and for loans above Rs 75 lakh, interest will be charged at the rate of 10.50-10.75 per cent.

Hyundai Motors & Syndicate Bank tie-up for quick auto loan for customers

Hyundai Motor India Limited has partnered with Syndicate Bank for quick disbursal of auto loans for Hyundai vehicles in India. The bank shall offer attractive loans packages on Hyundai vehicles to potential customers. Syndicate bank has more than 2200 branches pan India. It has partnered with Hyundai to reach out to wider client base and make loans easy and convenient to Hyundai customers.

Hyundai Motors India Limited is India’s largest car exporter and second largest car manufacturer in India. It has its manufacturing unit in Chennai and uses Chennai port for export of small cars from India.

Hyundai launched its most awaited model, Hyundai i20, in India on December 28, 2008 which took many by surprise. The new model from Hyundai has been extremely successful and has received raving reviews from the customers as well as the auto critics..

Dewan Housing Finance eyeing IDBI home finance subsidiary

Dewan Housing Finance has emerged as the front-runner to buy, IDBI Home Finance, having put the highest bid amongst the three shortlisted bidders.

A senior IDBI Bank official said,” IDBI Bank’s Board will meet on Friday to “consider and approve the selection” from amongst the three shortlisted companies
“In terms of pricing, Dewan Housing Finance has more weight than the other two companies which are in the race. However, our Board will take the decision on whom to sell.”

The two others in the fray to buy the Pune-based home finance company are Tata Capital and Religare Enterprises. IDBI Capital is acting as the advisor to IDBI Bank for the deal.

Earlier, the bank had received Expressions of Interest (EoIs) from over a dozen entities from which it has now zeroed in on the above three.

The home finance unit has a loan portfolio of over Rs 2,700 crore with a presence in 18 centres pan-India.

IDBI Bank decided to sell its subsidiary since it also sells home loan productsand felt that offering the same products from two group entities did not make business sense.

Home loan rate reduced by DHFL for new and existing customers

Leading private-sector housing finance company, Dewan Housing Finance (DHFL), on Wednesday cut its home loan rates for both new and existing customers by upto one per cent.

With the reduction, customers can now avail loans upto Rs 20-lakh starting at 9.75 per cent while for loans above Rs 20-lakh, the interest rate starts from 11.25 per cent, the company said.

The company has slashed interest rates for new customers by 0.5-1 per cent with immediate effect while for existing borrowers the reduction will be by 0.25 per cent.

Upto 125 bps cut in home loan rates by Hudco

Public sector housing finance firm Housing and Urban Development Corporation has reduced interest rates on home and project loans by 50 to 125 basis points with effect from January 1, 2009.

Hudco Chairman and Managing Director K.L. Dhingra announced the revised rates of interest and said they would be effective from January 1, 2009, according to the statement.

“Hudco has reduced its rate of interest on project loan by 50 basis points and individual home loan (Hudco Niwas) between 100 and 125 basis points for loans up to Rs 20 lakh for floating rate of interest,” it said in a statement.

For home loans up to five years, the interest rate has been lowered to 10.25 per cent from 11.50 per cent, a cut of 125 basis points, a senior official of the housing and infrastructure lender said.

For home loans with payback period beyond five years, the interest rates have been cut by 100 bps to 10.75 per cent from 11.75 per cent.

Though there has been no change in rates for Hudco’s lending to private commercial sector, interest rates for project loans to government sector has been cut by 50 basis points.

No slowdown in loan offtake – Vijaya Bank

At a time when many of its peers have scaled down FY 09 credit growth targets owing to challenges in market, state-run Vijaya Bank has decided to scale up its loans in ‘productive segments’ such as SME in the months ahead, a top official said.

Vijaya Bank’s Executive Director, S C Kalia said, “There is no question of scaling down our credit disbursals. In fact, we are aggressively lending to micro, small and medium firms and infrastructure projects. These sectors are the growth-drivers of the economy.”

Vijaya bank also expects to bring down its badloans significantly in the current fiscal year. The bank’s gross Non-Performing Assets (NPA) stood at around 1.75 per cent and net NPAs at 0.75 per cent as on September 30, he added.

The bank has a total credit-base of around Rs 37,000 crore and a deposit-base of Rs 52,000 crore. The lender has seen a year-on-year credit growth of 37 per cent as on September 30, 2008 and hopes to achieve around 25-30 per cent growth in FY 09, Kaliya said.

Following the rate cuts from the Reserve Bank last Friday, Vijaya Bank has reduced its deposit rates by 0.5 per cent across different tenures with immediate effect

“In the current market scenario, the corporate and SME clients are facing issues owing to the impact of global financial crisis in this market. The bank will provide adequate finance for viable projects to support these companies,” Kalia said.

One reason to compare home loans is to learn about the different options and loan features available to you. A home loan offset account, for example, could save you thousands of dollars over the life of your mortgage.

50 basis points reduction in lending rates by SBBJ

State Bank of Bikaner and Jaipur, an associate bank of SBI, on Tuesday announced a reduction of 50 basis points each in its prime lending rates and deposit rates effective from January 1 next year.

The bank has reduced its benchmark prime lending rates by 50 basis points to 12.75, SBBJ informed the Bombay Stock Exchange today.

The bank has slashed deposit rates by 50 basis points. New interest rates will be applicable from the beginning of the next month, it added.

Interest rate on term deposits for a period of one to two years has been revised downward to 9 per cent from 10.25 per cent, while the rate on deposits for 3 to 5 years has been revised downward to 8.5 per cent from 9 per cent.

However, senior citizens for deposits of more than one year will get an interest which will be 0.5 per cent higher than the general rates, the bank informed.

Up to 125 bps reduction in interest rates by PNB, BOB

In response to soft monetary stance of the Reserve Bank, three public sector lenders – Punjab National Bank, Bank of Baroda, on Monday announced a reduction in their benchmark lending rates by up to 75 basis points with effect from January 1.

The country’s second largest public sector lender, PNB, in a statement said that with the reduction, “the benchmark prime lending rate (BPLR) would come down to 12 per cent from the existing 12.50 per cent”.

Besides, PNB also announced a reduction in its peak deposit rate by 100 basis points to 8.5 per cent for deposits of one year to less than three years.

Accordingly, interest rates in the time buckets having maturities of 46 days and above have also been reduced by 25 bps to 125 basis points, the bank said.

Bank of Baroda in a communique to the Bombay Stock Exchange said, “The bank has decided to reduce its BPLR by 75 basis points from existing 13.25 per cent to 12.50 per cent with effect from January 1, 2009.”

1.75-2.25 bps reduction in home loan interest rates by LIC Housing Finance

On the heels of public sector banks slashing home loan rates, LIC Housing Finance has announced a 1.75-2.25 percentage point cut in lending rates for home loans up to Rs 20 lakh from December 17.

LIC Housing Finance Director and Chief Executive R R Nair said, “We have reduced our lending rates with effect from December 17. For a five-year term, our lending rate for loans up to Rs 20 lakh is 9.25 per cent and for those beyond five years, the rate will be 9.75 per cent.

For loans above Rs 20 lakh, the rate has been reduced from 11.50 per cent to 11.25 per cent, Nair said. Public sector banks recently cut their lending rates on home loans up to Rs 5 lakh to 8.5 per cent and loans of Rs 5-20 lakh to 9.25 per cent for the first five years, after which the lending rates will be reset.

The scheme, which is applicable for loans taken till June 30, also offers free life insurance cover and exemption from pre-payment penalties to borrowers in these categories.

LIC Housing Finance is offering floating rates for home loans. Within six months it will be linked to prime lending rates (PLR) minus 3 percentage points, or 2.5 per cent, depending upon the customer profile, Nair said. The rates will be reviewed on April 1 or July 1 next, he said.

Nair said, “Though the Government has directed public sector banks to give a five-year fixed rate, we cannot give fixed rates for five years because of possible uncertainties in market trends.”