Click to play videoNew Delhi: Things are heating up between private and public sector banks in the race for a home loans business.
The chairman of India's largest home loan company HDFC, Deepak Parekh has called SBI's 8 per cent home loan a gimmick.
With fear of losing business to public sector banks, he has asked SBI not to take away clients from private banks which have not drastically reduced home loan rates.
As public sectors banks cut interest rates on home loans, its the private sector that is yet to take a cue.
In fact, with SBI offering an interest rate of as low as 8 per cent for all home loans irrespective of the amount, the pressure on the private sector banks has only increased.
And the man who runs the biggest private housing loan firm says this just a trick from SBI.
Deepak Parekh said, SBI wants to increase its loan book. I think SBI's growth in mortgage loans may not have been strong this year. So it could be a kind of gimmick, kind of teaser rate to get customers locked in for one year at 8 per cent.
Parekh also fears that private banks will lose existing clients who are looking to swap their loans.
At eight per cent interest rate a loan from SBi will save anywhere between 5000 to 10,000 a month for someone who has taken a 30 lakh rupee loan for 20 years.
But private banks are still circumspect of cutting rates citing a slowdown in demand as the main reason.
ICICI head Chanda Kochar said, “There is a latent demand, people need homes. But one they are not sure about the perks, second they are not sure if interest rates will fall down further.
They are waiting for interest rates to fall down further. So in a way the interest rates at this rate, don't make the loans work or whether it is the corporate customer or the individual customer.
In the last few years, private banks have cornered most of the home loan business but now the heat is on and public banks are stepping on the gas.
This slugfest will only be good for consumers wanting to own a home in this downturn.
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