HDFC home loan at Just 8.25% rate of interest

HDFC (Housing Development Finance Corp), has decided to give loan at a fixed rate of 8.25% per annum. HDFC Home Loan new offer will be for all new loans taken before April 1, 2010, and the 8.25% Home Loan rates will remain fixed till March 2012. Thereafter, depending upon the loan amount, the customer will move to a floating rate structure, applicable on April 1, 2012. NRIs and PIOs can also get loans at this reduced rate, an HDFC release said.
Over the last few months, SBI had been offering home loan at as low as 8% fixed for the first year and afterward moving to a higher rate. Compared to HDFC’s 8.25% offer, SBI offers home loans of up to Rs 30 lakh at 8% for the first year, 8.5% for second year and from third year onward it moves to a floating rate, the bank said. The hugely advertised 8% rate from SBI had generated substantial interest among home buyers since it was launched.
According to industry estimate, for a 20-year loan of Rs 30 lakh and considering present rate formation is valid when customers move from fixed to a floating rate, the effective interest rate for the tenure of the SBI home loan will be 9.24% per annum compared to 8.63% in HDFC. In the Rs 30 lakh to Rs 50 lakh bracket, the effective rates work out to 9.24% for SBI and 8.81% for HDFC. And for loans of Rs 50 lakh and above, effective rate for SBI will be 9.5% compared to 9% for HDFC. A lower rate leads to savings on the part of the customer.
HDFC Chairman Deepak Parekh had, however, criticised the SBI offer and said the bank was “not trying to get any new money or loans in the housing loan market but only trying to get existing customers”. Subsequently, in a letter to shareholders, he said the differential rate could result in a subprime-like crisis.
HDFC also launched “Move in Home loans” to assist customers to get loans quickly to buy a “Ready to move in new property or a Resale property”.
All the customers who apply home loan and take a part-disbursement before March 31, 2010, will get this rate. The rate is fixed for loans of all amount but after March 2012, prevailing rates as per the amount of the loan will be applicable to the home buyers, an HDFC release said. At present, HDFC has three slabs: loans up to Rs 30 lakh, above Rs 30 lakh to below Rs 50 lakh and Rs 50 lakh and above.