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.
Filed under: Home loan, Home loan India, Home loan rates | Tagged: Home Loan Balance Transfer, PSU Banks, SBI Bank
