ICICI Bank Rate Cut: Cuts Home loan, retail loan and other loans rate by 0.50%

There comes the big news from ICICI Bank, the second largest bank of India and the largest private bank of India. It has decided to cut both the corporate as well as retail loan rate by a whooping 50 bps or 0.5%. This can come as a big booster package for the ailing housing and mortgage sector, because ICICI Bank is one of the front runners in the loan market, especially the House Loans or Home Loans.


What will be the effect on the EMI after ICICI Bank Rate Cut?
Since December, this is the 3rd rate cut by ICICI bank and the overall rate cut since then has now come to a total of 1.5% or 50 basis points. A rate cut obviously means that there will be less of EMI payment. So for an example, if you have taken a loan of say 50 Lakh Rs. for a period of 20 years, your monthly EMI amount would reduce by around 5150 Rs.

Is the ICICI Bank Rate Cut for new customers only or is it for old customers as well?
The ICICI Bank Rate Cut is applicable both for the new as well as old customers who have taken a floating rate loan from ICICI Bank. So both types of customers will benefit.

Who is going to benefit more from ICICI Bank Rate Cut?
If you consider the rate cuts which started in December 2008, it seems that the new customers will benefit more. The reason: the cumulative rate cut for new customers since December has been a total of 2.25%. However, for old customers it has been 1.5% only. So new customers can now look forward to taking a loan and benefit more.

Is there any other bank which offers lower rate of interest even after ICICI Bank Rate Cut?
SBI or State Bank of India is presently offering the home loan at 8%, which is lower than the ICICI Bank home loan rate even after the Rate Cut. however, this SBI loan rate is only for the first year - it may increase in the coming years. Though the rumors going around are that SBI will not sit silent. It is also expected to reduce the home loan rate by arouond 25 basis points before this month end. Then there are other banks also from whom some similar action can be expected.

As per TOI, Normally, it has been seen that SBI’s normal rate at which it offers loan to the customers is 25 to 50 basis points higher than the rates offered by HDFC and ICICI Bank. At present also, while ICICI Bank nad HDFC offers home loan of Rs 30 lakh at 9.25%, SBI charges 10.25%. Therefore, in the long term, the benefit of getting home loan at 8% could be off-setted. However, in future, in SBI also lowers the rate to the range of ICICI bank and HDFC Ltd, SBI’s offer of 8% is the best one. The present rate cut by ICICI Bank will help revive the real estate markets