The reduction in interest rates for fresh borrowers, however, does not apply to existing floating rate home loan customers. Incidentally, Bank of Baroda (BoB) lowered its rates in the first week of September itself, well before the onset of the festive season. It cut rates by up to 0.50 percentage points.

Union Bank of India has recently reduced the rate by 0.25 percentage points across all maturity buckets. Both BoB and Union Bank have reduced their rates for an unspecified period. A senior official with SBI said the move to lower home loan rates is to target the large pool of middle class borrowers. "The lowering of rates would lure fresh borrowers when they have additional flow of cash in hand," he said.

Although banks and other housing finance players have chosen the festive season to push their home loan products, industry observers say that the sluggish home loan growth since April has prompted them to go the extra mile to mobilise new home loan customers. The banks' home loan books have grown less than 5%, as opposed to 25-30 % growth seen in the last few years.

Interestingly, ICICI Bank has so far kept its home loan rates unchanged. The country's largest housing finance company HDFC, announced the `special' 10.50% rate for new customers willing to avail of home loans at the floating rate of interest. The offer is valid all loans disbursed on or before October 31, 2007.