Softer interest rate regimes helped banks and housing finance companies cutting interest rates on a consistent basis. Besides, real estate prices have plummeted from their peak in 1997. Coupled with this, the benefit of saving taxes also lured the consumer to go in for home loans.

Over the last six months, big players like State Bank of India, ICICI Bank, and Housing Development Finance Corporation have cut home-loan rates by a1most 2 per cent.

The year also saw ABN Amro Bank enter the housing loan business with an astounding offer. In October, the bank offered interest rate of 6 per cent in the first year and 6.5 per cent in the second year under its 'Super Saver Loan Package.'

Other banks got into the act. In November, Standard Chartered Bank too followed the race by announcing a special variable rate of 7.49 per cent per annum for home loans across all tenures up to 20 years.

The same month, ICICI Bank reduced interest rates on its adjustable (floating) rate home loan products. The bank announced adjustable rate home loans with maturity up to five years at the rate of 7.50 per cent and home loans with maturities of 6to years at the rate of 7.75 per cent.

The Indian Overseas Bank also announced a 25 basis points (0.25 per cent) reduction in rates, effective from November 1.

Housing finance companies like HDFC and DHFL Vysya Housing have also cut their interest rates. The latest one to join the bandwagon is Vijaya Bank, which cut rates to 7 per cent per annum for up to 5 years.

The National Housing Bank's decision to announce a 0.4 per cent reduction in the interest rates for refinance in October helped many banks slash interest rates. Bankers feel there is room for a further fall in home loan interest rates.

Text: Adur Pradeep

Housing and home loans