After State Bank of India,state-owned Central Bank of India has decided to freeze interest rates for new home loans at 8 per cent for a period of one year. It is learnt other public sector banks are also planning to follow suit.
According to Central Bank,there is no upper limit set for the loan amount under this scheme. After a period of one year,the interest rate will be reset to the respective schemes. Central Bank also reduced the lending rate for housing loans up to Rs 5 lakh by 0.5 per cent to 8 per cent from Wednesday under a special package.
The scheme,which will be applicable for all loans taken till March 31,is aimed at pushing credit flow to the housing sector, Central Bank executive director Ramnath Pradeep said.
SBI had recently announced a similar scheme,wherein home loan rate was fixed at 8 per cent for one year. However,private sector banks are yet to bring down the home loan rates.
Meanwhile,HDFC said it would reduce rates if cost of funds further comes down. Asked whether HDFC would cut interest rates,HDFC chairman Deepak Parekh said,If our cost of fund comes down,we will certainly reduce rates.