My experience with HDFC has been extremely dissatisfying. I am deeply annoyed at the lack of transparency and lack of mutual relationship shown by HDFC. I have noticed over a period of years that the charged interest rate is floating only upwards.
I have noticed whenever the market conditions ask for a rate increase the effect is passed on to existing customers in a flash but when the rates fall the benefit goes only to new customers.
Whereas most of the banks have reduced rates as per the directions of RBI HDFC has turned a blind eye towards the existing customers. I personally feel that HDFC behaviour is not only unfair, unethical but also totally monopolistic. If feel that I have taken a home loan from an old time money lender rather than a modern bank. I am mentioning a few examples of the same below.
Floating loan move only upwards and rarely downwards - The whole idea of floating rate is that customer can tie himself to the interest rate changes over his term of the loan. If the bank is only going to float the rates upwards when the market rate goes up, but rarely downwards when the market rate goes down, the whole purpose of loan being floating is contradicted. HDFC will move the rate upwards the moment such move is initiated in the market but for the rates to fall it takes a very long time.
PLR rarely revised lower, new customers given better spreads - HDFC is resorting to the practice of offering new home loan at lower interest rate compared to existing customer by giving a better spread over PLR. With this, the bank continues to charge above market interest rate to the existing customer and also attracts new customer. Clearly the reduction in cost of funding is not passed on to the existing customer in this case but in case the cost of funding goes up existing customers are the first to be effected by the same. This is unfair & unjust. The present difference is not because of credit worthiness of customers but because of a desire to get new customers & ignore old ones.
Unethical Conversion Fee - HDFC is offering to move the rates lower by 0.75% for a floating loan if the customer pays 0.5 % of the outstanding amount. This is a grossly a fraudulent practice. HDFC Bank mutely moved the rate up when the market rates went up, when the market rate went down, they are asking conversion fee to float the rate down I feel this is nothing but blackmail.
Increased pre-payment changes - The unilaterally decision to increase the Pre-Payment charges on home loan from 2% to 3% is another example of HDFC monopolistic attitude. Rather than offering good services & rates to customer to retain them you are resorting to such unethical practices because HDFC know that people do not wish to stay with you because of these unethical practices pointed above.