Always factor in the pre payment charges before transferring your home loan to alternate banks

After Diwali one can see the dip in Home loan rates as most of the commercial banks plan to cut down on home loan interest rates. Punjab National Bank (PNB) and Union Bank of India (UBI) have already slashed rates up to 50 basis points. UBI has cut rates by 50 basis points for loans up to Rs 30 lakh . But this reduction in rates may not hold good for all the types of loans. However the private loan providers like HDFC and ICICI prefer to wait and then make their move.
These rate cuts are due to a shift in the policy of RBI and the Government. After two years of credit tightening and the recent liquidity situation, there is a complete U turn in the credit policy of the government. In Home loans where one has opted for floating rate of interest , one gets the benefit of reduced rates even if the rate he has borrowed is different and vice versa.
But in last few years if there are cuts in Home loan rates they are usually given first to new borrowers and then to the existing customers. Banks pass on the reduced rates to the existing users after some time. With the fall in property prices and discounts by various property developers the customer is going to be the King again
In case of Personal loans, Car Loans the trend is still on the opposite way as the liquidity crunch and higher defaults in above segments prevent Banks to lower rates. Personal loans disbursals in the entire country are on the way down. A large number of private Banks have either stop sourcing Personal loans or have downsized there business. Car Loans is also going through the same phase.
From the government side,the efforts are now on to make sure Credit is available to the general public.The finance ministry sources said the government is in constant touch with commercial banks to ensure an easy liquidity for priority sector loans. "The government and the central bank have taken a series of measures to infuse liquidity into the system and there is no reason that the banks should be wary of providing credit to genuine borrowers even after that," an official said.
So, keep a close watch, and choose your best deal!!