What prompts banks to cut home loan rates?

Saturday, December 28, 2013

MUMBAI: Top three home loan institutions- HDFC, SBI,ICICI Bank – have reduced home loan rates by 15-25 basis points last week to catch borrowers in a fiercely competitive market. Their offerings are only for new loans though.

With hardly any signs of demand picking up from the corporate world, banks are rushing to tap the home loan market by reducing rates even though their cost of funds haven’t gone down.

“We are flush with funds and need to deploy them profitably. Liquidity has been building up over a period of time,” said A Krishna Kumar, Managing Director (Group Executive – National Banking) at SBI. “It will take time to understand the impact of rate cuts on the cost of funds,” he added.

Source: Economic Times (link opens in a new window)