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March 9, 2001
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Money > Business Headlines > Report March 9, 2001 |
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More home-loan firms reduce interest ratesBS Corporate Bureau Various housing finance companies including PNB Housing Finance Ltd (PNBHFL), Birla Home Finance Ltd (BHFL) and Tata Home Finance Ltd have reduced their interest rates by 0.5 per cent following the recent 1 per cent bank rate cut by the Reserve Bank of India. PNBHFL said the revised rate for 15-year loans up to Rs 1 million has been brought down to 12.5 per cent against 13 per cent. Housing loans between 16 years and 20 years will be available at 12.75-13.5 per cent for different amounts. Interest rate on loans for repairs and renovation has been reduced by 0.5 per cent to 13 per cent. The revised rates would be applicable from March 8. The company has also reduced interest rates on fresh public deposits under various schemes by 0.25-0.5 per cent to offset the loss arising out of reduction in interest rate on loans. While BHFL reduced its interest rates on up to 7-year loans in easy build/easy home/easy extend schemes from 12.75 per cent to 12.25 per cent, the interest rate on 8-15 year loan came down from 13 per cent to 12.5 per cent. The company also revised its interest rates for the easy upgrade scheme from 12.75 per cent to 12.5 per cent for a loan tenure greater than 6 years. These housing finance companies (HFCs) have cut rates even before a cut in the refinance rate (the rate at which the financial institutions borrow funds from the banking system) by the National Housing Bank. Since the present refinance rate is 12.25 per cent, the housing finance companies are left with very little margins. The move came up because the Housing Development Finance Corporation (HDFC) had recently cut its interest rates by 0.5 per cent and HFCs feared that they will become uncompetitive in the market. The home loan firms are now putting pressure on NHB to reduce its refinance rates substantially. "After reduction in bank rate by 1 per cent, the refinance rate of RBI to commercial banks is now 7 per cent. The refinance rate of NHB, however, is still 12.25 per cent. The reduction in the interest rates has been effected by companies in anticipation of reduction in refinance rate by NHB," PNBHFL said.
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