In order to prop up the sagging home loan market, state-run lenders Central Bank of India and Bank of Maharashtra  have announced slashing of interest rates by up to 0.25 per cent, and also decided to waive the processing fees.
Pune-headquartered Bank of Maharashtra has decided to give housing loans under Rs 25 lakh for a five-year tenor at the reduced base rate (below which it cannot lend) of 10.6 per cent, it said.

Similarly, the Central Bank of India has cut home loan rates by up to 0.25 per cent, it said. A home loan of up to 25 years and under Rs 30 lakh will be available at 10.75 per cent. Both the lenders have also announced waiver of processing charges. While Central Bank of India is offering a blanket waiver of processing fees for loans across amounts and tenors till March 31, BoM has waived it only for applications under Rs 25 lakh.

BoM charged up to Rs 12,500 for such loans in the past. High inflation and the ensuing jacking-up of interest rates by the RBI, coupled with the uncertainties on the economic growth, are believed to have dampened the home loan market.

In another development, Punjab & Sind Bank said it has abolished pre-payment penalties on housing loans for all types of borrowers.

According to an RBI report released on January 12, the housing credit growth fell to 2.3 per cent from 10.7 per cent a year ago.The country's largest lender State Bank of India is also contemplating a cut in interest rates in select home loan categories where demand is slow. The bank is also likely to cut interest rates on education loans by up to 100 basis points (1 per cent).