India's fourth-largest mortgage lender, LIC HFL (LIC Housing Finance Ltd), is working out a new floating rate product with an initial interest rate of 10.4 % loans up to Rs. 30 lakh, to be launched in January, 2011.
It will discontinue its fixed cum floating rate home loan product 'New Advantage 5' by this month (December) end. 'New Advantage 5', launched in September, 2011 has managed to bring in business worth Rs 1,500 crore. Under the fixed cum floating rate product, the customer is given a one time offer to convert to a fixed rate loan within the first year of the disbursement of the loan. Customers taking this option will get to convert their loans into a fixed format for 5 years. Under this, the fixed rate for the first 5 years is 11.15% for loans up to Rs. 30 lakh.
Mr.V. K Sharma, Director and CEO, LIC HFL said,''The special offer will be for the first 3 months of loan repayment, after which the interest rate will be linked to the PLR (Prime Lending Rate). Our company's current PLR is at 14.40%. It will start falling soon. We are the last ones to load our customers with higher rates and the first ones to reduce interest rates once the RBI (Reserve Bank of India) cuts."
Mr.V. K. Sharma also said ,''RBI to begin cutting the repo rate by the beginning of next fiscal. I feels competitors will follow suit and offer customers much cheaper products in the months to come.""
The LIC HFL's average cost of funds in the second quarter was at 10.25%, while in the current quarter, it has been in the 9.75-9.9% range.
It will discontinue its fixed cum floating rate home loan product 'New Advantage 5' by this month (December) end. 'New Advantage 5', launched in September, 2011 has managed to bring in business worth Rs 1,500 crore. Under the fixed cum floating rate product, the customer is given a one time offer to convert to a fixed rate loan within the first year of the disbursement of the loan. Customers taking this option will get to convert their loans into a fixed format for 5 years. Under this, the fixed rate for the first 5 years is 11.15% for loans up to Rs. 30 lakh.
Mr.V. K Sharma, Director and CEO, LIC HFL said,''The special offer will be for the first 3 months of loan repayment, after which the interest rate will be linked to the PLR (Prime Lending Rate). Our company's current PLR is at 14.40%. It will start falling soon. We are the last ones to load our customers with higher rates and the first ones to reduce interest rates once the RBI (Reserve Bank of India) cuts."
Mr.V. K. Sharma also said ,''RBI to begin cutting the repo rate by the beginning of next fiscal. I feels competitors will follow suit and offer customers much cheaper products in the months to come.""
The LIC HFL's average cost of funds in the second quarter was at 10.25%, while in the current quarter, it has been in the 9.75-9.9% range.
Without the use of a mortgage, many people would not be able to own a house. Since the inception of mortgage loans, many different types of loans have been introduced. These include ARMs or adjustable rate mortgages and fixed rate loans, amongst many other types of loans.
ReplyDelete