BANKS SAY NO TO UNIFORM HOME LOAN RATE CUT

At the meeting organised by the RBI with select Banks, RBI has once again nudged top banks to charge lower home loan rates to old customers instead of just using the lower interest rates to pull new borrowers. However, banks continued to resist the proposal citing cost mismatch.


Under the present circumstances, old borrowers continue to pay more interest rates when compared with the new borrowers as most banks came out with lower lending rates and new schemes to target new borrowers.


Banks are opposing the move to reduce the home loan rate to old borrowers on the plea that the old funds are raised at a higher cost and if the rates are to be reduced now, it will be causing asset-liability mismatch. Some banks are also saying that the same rate to all borrowers could spark legal feuds since interest spreads are varied from customer to customer and each customer signs separate loan contracts with banks.


Source: http://economictimes.indiatimes.com/Personal-Finance/Loan-Centre/Home-Loans/Home-Loans-News/Banks-say-no-to-uniform-home-loan-rate-cut/articleshow/5446717.cms?curpg=1