Under the given circumstances, it would be prudent for home loan seekers to make full use of the benefits offered by banks which may not last long

Make hay while the sun shines, goes a saying. The housing loan credit off-take was sluggish in the recent times with high volatility and speculation on interest rates. But a slew of measures taken by the Reserve Bank of India seems to have started to pay-off. With further reduction in Marginal Standing Facility rates on October 7 (MSF is a short-term borrowing facility provided for banks besides repo which meets its immediate liquidity requirements), the pressure on banks has considerably eased. The government has also infused adequate capital into the banking system which has increased the availability of funds with banks.

The timing of the RBI’s measure, successively reducing the MSF rates within a span of two weeks, has been perfect since this is festive season which goes on till November and provides good reason for people to invest in various holdings and purchases.

SBI, Dena Bank, Corporation Bank, State Bank of Patiala, and Karnataka Bank, among other banks, have either reduced the lending rates on home loans or have completely waived off the processing and documentation fee. The benefits that the banks have received by way of easing of liquidity and reduction in rates have been passed on to the customers, which would enthuse new home buyers.

A saving

Under the given circumstances it would be prudent for home loan seekers to make use of the benefits offered by banks which may not last long.

A few banks have announced that their home loan rates would be at the base rate which would mean that a borrower could save up to about 0.50 per cent on the interest rates compared to the earlier rates (the home loan rate was 10.75 per cent till recently which has been reduced to about 10.25 per cent, average across banks, after the recent government measures). This could mean that on a Rs.25 lakh loan for a period of 15 years the saving would be Rs.775 per month on EMI and also saving on processing fee.

This could be the best the festive season can offer, but remember to opt for floating rate.