HDFC to keep the rates on auto loans unchanged

Second largest private bank in the country, HDFC Bank has decided to keep its interest rates on auto loans unchanged. Earlier this month SBI had reduced the interest rates on its home loan by 50 basis points, and many had thought that it would bring a similar reaction from the industry.

HDFC's senior VP and business head for auto loans Mr. Ashok Khanna stated that the bank is not looking for any concessions on auto loans in the near future. Further adding that the bank disburses Rs. 1,500 crore of auto loans, which is 22% of the total market, making them the leader in auto loans.

SBI had reduced the interest rates on loans after the RBI had announced one percent cut in statutory liquidity ratio (SLR). At present, SBI lends auto loans across all tenures at 10.75%, while HDFC Bank's auto loans range from 11% up to 16% for used car loans.

Loan rates lowered by SBI

Since RBI is stepping for 1% point cut on SLR (Statutory Liquidity Ratio), to compensate the advantage by this SBI has reduced loan rates on Home loans and Car loans.

A war can break out for rate cuts and attracting the retail customers among the banks as there has been decrease in the loans to the industry.

The interest rate on car loans by SBI has been reduced to 10.75 per cent as compared to 11.25 per cent earlier. If the EMI is designed for 7 years tenure, it is reduced to Rs. 1,699 per lakh instead of Rs. 1,725 earlier.

For home loans:-

Amount	New rate (%)	Old rate (%)
Up to 30 lakh	10.25	10.50
30 – 75 lakh	10.40	10.75
Beyond 75 lakh	10.40	11

The reduction on Home loans by India’s largest bank is 0.60% points and on car loans is 0.50 % points.

New features on Housing finance from IDBI Bank

Leading public sector lender, IDBI Bank has introduced new features on home loans which would allow borrower to avail credit for construction, rennovation, purchase, balance transfers, loans against commercial and residential properties, et al.

The bank is offering maximum credit limit of Rs.1 crore for retail home loans allowed by RBI, and allowing customer to choose between fixed or floating rates. Other salient features include doorstep service, legal assistance, and flexibility of part foreclosure of the loan.

Also the bank requires minimum paperwork making the process uncluttered and less time consuming for the borrower.

How can top up home loans help the stressed consumers

Home loans are perhaps the most crucial loans that a person takes all his/her life. But increasing property prices and interest rates have made it difficult for the borrowers to make the best out of the borrowed funds. So what can one do in such situation?

What if some one can pour some more funds just like in an empty glass? This is exactly what many banks are offering and consumers are unaware of. Top up loans offered by banks are offered to existing customers of the bank, who can avail the benefit of low interest rates attached with these loans.

StateBank of India, the country's leading lender is offereing top up loans at lower interest rates than all of its peers. A top up loan from SBI comes at 11.25% compared with 12.25% from ICICI and HDFC Bank each. The term of the loan is same as that of the original loan. Another interesting feature on top up loans is that it can be used not just for home related purpose, but for personal uses as well.

New player in the Home loan segment

After the two years gap, Hudco is all set to enter the home loan segment again. “We are planning to launch our retail home loan product Hudco Niwas during this year,” said the Hudco Chairman and Managing Director, Mr. V.P. Baligar.

The company is waiting for the board approval. The company recorded net profit of Rs. 550.03 crore in the last year and a growth of 14% in this fiscal with net profit of Rs. 629.18 crore.

With regard to the asset quality, Mr. Baligar said, the gross non-performing assets of the company stood at 6 per cent while the net NPA was 1.35 per cent at the end of March 2012. “We have sanctioned a total loan of Rs 20,511 crore, in 2011-12, which is the highest so far,” he added. The company’s focus will be reducing NPAs and recovery in this fiscal.

Prefer Floating Interest Rate Home Loans

With the inflation moving up and slowdown of the economy, owning a Dream Home has now become a dream not easy to turn into reality. Even if all the documents are in place, the whole procedure completed and loan is approved by the bank to fulfill your dream, you will be one step away. It is difficult to decide whether to opt for fixed interest rate or floating interest rate.

In the Fixed rate, one has to pay fixed EMIs whether the market goes up or down. You can’t enjoy the benefits of decreased lending rates when market goes down.

While opting for floating rate, if the lending rate decreases, EMIs goes down and vice-versa follows.

Both have its pros-cons but floating interest rate is always lower in the initial years of loan. So it is better to enjoy low EMIs for first few years.

Removing penalty on foreclosure of Home Loans unlikely to affect Banks

RBI stopped prepayment penalty on home loans since last week. “I welcome this decision because home loan is a national priority and customers stand to gain,” said Mr. M. Narendra, Chairman and Managing Director, Indian Overseas Bank.

“The customers were chased for retail loans earlier and there was enough liquidity in the market. But today, that situation is not there, and the costs are not cheaper for any bank. Hence, the waiver of penalty will not trigger any big shifts in the market,” Mr. Narendra said.

This move has tempted customer for foreclosure of loans and opt for loan-swaps scheme offered by banks often.

According to experts, very less proportion of customers opt for foreclosure. Hence, this step will enhance competition among banks and better setting up of floating interest rate home loans.