Cheaper EMIs?
- ICICI Bank reduced its home loan rates by 25 bps
- But the lender increased its spreads on home loan rates to 25 bps above the base rate from 15 bps earlier
- Individual salaried borrowers will now be charged 9.65% interest rate on home loans up to Rs 5 crore down from 9.90% earlier
- Women borrowers will get the same loan at 9.60% down from 9.85% earlier
- The move is similar to SBI which has also started charging home loan borrowers a spread higher than its base rate
ICICI Bank, India’s largest private sector bank on Tuesday reduced its home loan rate by 25 basis points, following rivals State Bank of India (SBI) and Housing Development Finance Corp (HDFC). (One basis point is 0.01 percentage point.)
Individual salaried borrowers will now be charged 9.65% interest rate on home loans up to Rs 5 crore down from 9.90% earlier, the bank said on its website. Women borrowers will get the same loan at 9.60% down from 9.85% earlier.
However, the bank has increased the spread on home loans to 25 basis points above the base rate from 15 basis points earlier, a increase similar to SBI which has also started charging home loan borrowers a spread higher than its base rate.
The reduction in ICICI’s home loan rate was expected as the bank had reduced its minimum lending rate or base rate by 35 basis points to 9.35% effective October 5. SBI has also reduced its base rate by 40 basis points to 9.30% at the end of last month.
State Bank of India’s best offering for women is 9.50 per cent, while the same for other borrowers is 9.55 per cent.
Non-bank lender HDFC, which also announced a rate cut on Monday, is at par with ICICI Bank’s 9.60 per cent for women and 9.65 per cent for others.
The SBI’s move, which came to light over the weekend, had come under attack for not passing on the entire benefit of the base rate cut to home loan borrowers, especially at a time when RBI has been pressing for a greater transmission of its policy rates.
Generally, the spreads over base rates represent the risk assessment of a bank from a particular segment.
The existing borrowers were, however, happy at SBI’s move for benefiting in the entirety as their rates are linked to the base rates.
ICICI Bank’s old borrowers too will be getting the benefit of the entire 0.35 per cent base rate cut. An increase in the spreads will help lenders to protect their net interest margins.
(With PTI inputs.)
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