Housing finance majors are fighting tooth and nail to grow their loan portfolios, which is great news for the consumer. For, now he/she gets a handle to wangle the best rates.

Rack rates -- or rates given on the rate cards or 'official' rates -- have had little meaning for some time now, because the consumer has learnt to negotiate hard and lower the rates.

The drive for market share has meant players are actually reducing the home loan rates, which goes against the trend of rising rates that started last year.

So much so, a 10-year home loan today can be available for 7 per cent from a leading housing finance firm. This means a retail customer can borrow at just 46 basis points more than the central government's 10-year bond rate of 6.54 per cent!

Interestingly, Housing Development Finance Corporation [Get Quote], the home loan pioneer whose rates were among the highest in the past, today offers the lowest rates in the country.

It gives Rs 10 lakh plus loans at 7.25 per cent, while those below Rs 10 lakh are charged 7.5 per cent, immaterial of the duration of the loan.

Initially, HDFC's [Get Quote] lowest interest rate offer was up to January end, but has since been extended to March 31.

The idea is to expedite the decision-making process of customers, who are sitting on the fence in terms of whether or not to take a home loan.

What happens is, for housing finance firms, there is a vast difference between actual loan sanctions and disbursements. The differential varies between 75 and 85 per cent -- meaning, only 75 to 85 per cent of the loans sanctioned get disbursed.

In the case of ICICI Bank [Get Quote], it is about 80 to 85 per cent. Most housing finance companies tend to keep in touch with their customers, help them identify properties and complete the legal procedure where required.

Housing finance companies face an acute problem of customers failing to take disbursements -- files are kept open for 6-8 months as customers have yet to select properties, or have changed their minds on going for a home loan, even after paying the processing charges.

This is one other reason why housing loans are customised in terms of flexibility in payments and interest rates. Concessional interest rates depend upon an individual's profile, salary and job status.

Some companies pre-select customers by virtue of where they work, offering them a reduced home loan rate of 25-50 basis points against the rack rates. LIC Housing Finance [Get Quote] offers reduced interest rate on home loans to employees of over 150 select corporates by 25 basis points.

Employees of Infosys [Get Quote], i-flex, Dr Reddy's and Wipro [Get Quote] among a host of other top corporate houses get finer rates depending upon the tenor of the loan.

"We have to ensure that even on a larger base, we are able to maintain a growth of 25-30 per cent on sanctions and disbursements," said the CEOs of  a housing finance  company.

Who gets a better deal

• Those earning higher salaries.
• Those having a professional degree which shows growth potential.
• A chartered accountant gets a better deal than a graduate.
• A younger individual can bargain for a lower rate as he can take a longer-term loan.