HDFC Bank Home Loan Bonanza

Home loan giant HDFC created a sensation in the home loan market by announcing a slash in the interest rate for its home loans yesterday. It has cut down the rate of home loan for the first year from 8.75% to 8.25% per annum. This is essentially a teaser rate was used by SBI a few months back and received great response. After the first year elapses, HDFC will charge an interest rate of 9% from the customers. During that period, the customers will be shifted to a floating rate structure. That will depend on the tenure and amount of the loan.

When SBI introduced the teaser rates for its loans, the move created ripples in the market. Interestingly, it still offers an 8% interest rate for the first year but the customers have to pay higher rates for the subsequent years. Even with the new teaser rate announced, HDFC will carry on with its existing floating rate loans. It ranges from a rate of 8.75% to 9.25%, depending on the loan amount. HDFC along with the majority of lenders discontinued the teaser rates in January when interest rates began soaring upwards.

However, SBI was the lone player to stick to the teaser rate and it worked wonders for the entity. Now that HDFC has observed that rates have not grown sharply, it has re-introduced the teaser rates. The competition is quite fierce in the home loan market and with more private operators entering the market, old time players need to offer special plans from time to time to woo the customers.