Mumbai: Private sector lender Axis Bank has reduced floating interest rates of home loans by 0.50% for existing and future customers, a senior bank official said today.
The industry practice was to acquire fresh customers by offering a lower rate on floating loans “but we want to maintain a parity between both our existing and future customers,” Axis Bank’s Assistant Vice-President Imtiaz Ahmed told PTI here.
The rate has been brought down from 11% to 10.5% for both categories, he said, adding that the revised rate comes into effect from 1 October.
The bank (formerly UTI Bank) has, however, not effected a change in its fixed home loans rate, which remains at 13%.
“We have no immediate plans to have a re-look at our fixed rate,” Ahmed said, adding that nearly 95% of the bank’s home loan customers were opting for floating rate.
“Our decision to lower rates on our floating home loans is a strategic decision,” he said.
There has been a good growth in the bank’s home loans portfolio and presently it constitutes 54% of the total retail portfolio, he said.
“Every month, we are adding around Rs300 crore by way of mortgage loans.”
A clutch of banks have reduced their home loan rates in the last one month.
While some have offered reductions in view of the on-going festival season, others have done so to keep pace with competition.
Some of the leading banks that have lowered home loan rates are public sector Bank of Baroda, Union Bank of India, Canara Bank and IDBI Bank.
Private sector HDFC too has slashed rates on home loans. Its Chairman Deepak Parekh had last week said cost of funds had come down for the institution and hence the decision to reduce the rates was taken.
While country’s largest lender State Bank of India has not yet reduced rates in the segment, it might re-look at the same soon, say banking industry sources.
Similarly, ICICI Bank has not reduced its rates. Indications are that the country’s second largest lender might wait till the Reserve Bank’s review of the monetary policy on 30 October before taking a decision on the matter.