Cheer up, home loan rates may go down

WITHIN REACH: PSU Banks says housing loans between Rs 20 lakh to Rs 30 lakh may see lowering of rates.

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New Delhi: Banks have no plans to hike the interest rates on home loans in the immediate future and what could be more good news the rates could even fall.

Union Finance Minister P Chidambaram's advice to public sector banks just two days after the Reserve Bank of India (RBI) told banks they could not lend another quarter of a percent of extra deposits they raise is that they should not increase the interest rates.

"In the reasonable future I do not expect any increase in interest rates by the public sector banks," Chidambaram hoped.

The Cash Reserve Ratio hike will raise the cost of funds, but PSU bankers believe they can absorb the increase.

"This is an extraordinary situation so far as financial sector is concerned and my customer is concerned. So every time I have not to look like I have got the opportunity so make some more profit," KC Chakraborty, CMD, PNB said.

There may also be some good news for potential home loan owners. With the RBI relaxing risk norms in this sector, bankers say home loan rates will remain stable and may also go down in this quarter.

Prakash P Mallya, CMD, Vijaya Bank said, "Since the housing loans from Rs 20 lakh to Rs 30 lakh have been brought under the 50 basis points, I think in that slab the home loan rates will come down."

Interestingly the Finance Minister also asked PSU banks to reassess their derivatives portfolio and sell the instruments to customers only after thoroughly explaining them.