After SBI, HDFC offers floating rate for home loans

Hoping to beat market leader State Bank of India at its own game, Housing Development and Finance Corp yesterday announced a dual-rate loan under which a borrower will be charged a fixed rate up to March 2012 and a floating rate thereafter.

For a 20-year loan of Rs30 lakh, a borrower will pay a fixed rate of 8.25 per cent up to March 2012 and then a floating rate that will be 500 basis points below the prime lending rate. Currently, the PLR is 13.75 per cent.

The scheme is very similar to the one SBI launched earlier this year, where a borrower pays a fixed rate of 8 per cent for the first year and 8.5 per cent for the second and third years. From the fourth year, the borrower can opt between a fixed and a floating rate. SBI's floating rate is 275 basis points less than its benchmark rate, which is 11.75 per cent, according to information on its website.

HDFC joint managing director Renu Sud Karnad said in a statement, ''There is ample liquidity in the system. The banking system continues to park around Rs1 lakh crore) with RBI through reverse repo. We have been able to bring down our costs due to improved operational efficiency and good quality portfolio. Based on current marginal cost of borrowing, a special festive offer is being made to new customers to reduce the cost for the home buyer.''

This special ''festive offer rate'' is applicable to all new home loan customers who apply before 31 January 2010, and take at least part disbursement before 31 March.

While the fixed rate will remain the same irrespective of the loan amount, the floating rate will vary. Currently, HDFC has three slabs - loans up to Rs30 lakh, between Rs30 lakh and Rs50 lakh, and Rs50 lakh or above. The same product will be available to NRIs and PIOs.
According to the statement, HDFC's loan approvals during the six-month period ended 30 September amounted to Rs28,418 crore compared to Rs24,180 crore in the corresponding period last year, representing an 18 per cent growth. Loan disbursements during the six-month period ended 30 September 2009, amounted to Rs22,342 crore compared to Rs17,788 crore in the corresponding period last year, representing a growth of 26 per cent.

On a sequential quarter basis, the growth in individual loan approvals and disbursements for the second quarter of this financial year has been 26 per cent and 24 per cent respectively, compared to the first quarter ended 30 June.

''HDFC's recovery performance continues to be very good. This is the nineteenth consecutive quarter end at which the non-performing loans have been lower than the corresponding quarter end in the previous year,'' the statement said.