The government has announced its decision to extend the one per cent interest subsidy scheme on housing loans of up to Rs 15 lakh where the cost of the house must above 25 lackh, for a period of one year.

Home Minister P Chidambaram said that the one per cent relief would be beneficial to the middle class and the lower idle class citizens in the country as the interest rates have risen to higher levels. The subsidy will have an upper limit of Rs 14,912 for a loan of Rs 15 lakh, and Rs 9,925 for a loan of Rs 10 lakh.

The facility will be available to all housing loans that are availed during the current financial year. The union cabinet, headed by the Prime Minister Manmohan Singh, has given its approval to the extention of the scheme for a period of one year.

The government has made a budgetary provision of Rs 400 crore for the financial year 2012-13 for implementing the scheme. The National Housing Bank (NHB) is responsible for the scheme for both banks and housing finance companies in the country.