New Delhi: If you are an existing customer of ICICI Bank home loans or are planning to take one, there is a reason to rejoice. According to the ICICI Bank MD and CEO K V Kamath, the bank can cut interest rates on home loans for both new and existing floating rate home loan customers from the first quarter of next fiscal.

"We expect the rates to drop in Q1. After that we will see if we can write down the rates," he said. Kamath has also hinted at introducing a risk based pricing mechanism in various loan segments. This means that before deciding on interest rates for a particular customer, a thorough assessment of his credit worthiness will be made and a risk profile of the borrower will be created. If he appears less risky to the bank, the borrower will get better terms and lower interest rates and higher interest rates will be offered to risky profiles.

Credit Bureau of India Limited (CIBIL), which is contemplating to launch a credit score database will be a good source of credit information about borrowers. The credit score, which will be a number between 300 and 900 will indicate how credit worthy a borrower is. The closer one's score is to 900 the less risky he will be for the banks and so the best interest rates will be offered to such a borrower.

K V Kamath, doesn't foresee any increase in home loan rates in near future. Though the increase in Cash Reserve Ratio (CRR) by Reserve Bank of India (RBI) has put pressure on cost of funds and hence has affected the profit margins of banks to a little extent, but most of the banks have not changed their interest rates. In fact two of the largest banks, the State Bank of India (SBI) and ICICI Bank have decided to extend their festive discounts on home loans and other retail loans till January 31 this year. Other industry experts also have similar opinions and believe that the home loan interest rates will decline if the RBI keeps the CRR at current levels.