With the base rate regime coming into effect from 1st July 2010,  the old home loan borrowers may get a chance to set a bargain for a lower interest rate as it is expected that many banks would be re setting their lending rates after the base rate sets in.

It has been already declared by RBI that the already existing customers should be given a choice between staying with their old loan rates or switch to the new rates set as per the base rate system of lending.

It has been confirmed by many public as well as private sector banks that they would be pricing their retail loans 1-2% points above the base rate in order to remain competitive.

"The new customer may enjoy rates in the region of 9-10%, while existing customer will still be paying 1-2% below the existing prime lending rate which for some banks is as high as 13.75%," said an official of the country's largest lender, State Bank of India.

In the new system of lending, base rate would not be kept high by banks in the fear of losing out in the competitive environment.

"In order to be competitive most banks will keep the base rates in the range of around 8-9%. Customers who are in the mid-term of the loan period and are paying interest in double digits will have an advantage" said the SBI official.

It has however not been openly declared by banks whether they would be actually giving out this benefit to the existing customers.

"It will depend on the customer profile as well. Generally banks tend to hold on their retail customers even if they have to pass on a 50 basis points (0.5%) rebate," said an official from a private sector bank.