Leading players in the housing finance business like HDFC, ICICI Bank and State Bank of India said 80 per cent of their customers still wanted floating rate loans.
"The change in the interest rate is just notional and there has been no real rate increase. Also, there is still a gap of 50 basis points between the fixed and variable structures, and it will take some time before variable rates exceed the fixed structure," Rajiv Sabharwal, Chief Operating Officer of ICICI Bank Home Loan, said.
"Our variable interest rate is 7.5 per cent, and most customers do not see any hike in the short term. Even if it increases by 25-50 basis points, the increase will just be Rs 25-30 per lakh of loan. Customers still want to ride the swings in the interest rate cycle and go for variable rate loans," Renu Sud Karnad, executive director, HDFC, said.
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Home loan customers have also taken note of the recent cut in interest rate by BHW Birla Home Finance to 7 per cent. In fact, BHW Birla Home Finance managing director Ralph Haerke told Business Standard recently that the company could cut rates further.
Realty experts point out that given the high returns from residential real estate over the last few years, many buyers are still willing to take their chances with floating rate schemes.
"Over the last ten years, the returns have been in excess of 30 per cent. Thus, for a speculator, the risk is still worth taking with a floating rate loan," a real estate investor told Business Standard.
