State Bank of India (
SBI) has hinted to continue with its 8%
home loan scheme although with few modifications. They have yet to formally take a decision on the extension of the offer (whose tenure is to expire on March 31st). SBI offered home loans at 8-8.5% to new customers. These products were launched in August 2009. There was initially a limited period offer for 3 months but due to the growing demand for the products these were extended till 31st March this year.
SBI official said, "Well, I suppose there can be modifications (in the products), which will be in tune with our liquidity position...normally, we don't kill any product".
My Home Campaign
8% fixed interest rate for 5-years for loans up to Rs.5-lac with a maximum tenure of 10-years
For loans above Rs.5-lac and up to Rs.50-lac, it offers a fixed rate of 8% during the first year and 8.5% during second and third years.
SBI, pioneers of special home loans or teaser schemes disbursed loans worth Rs.2,500 crore per month (on an average), totaling Rs.25,000 crore. Their loan portfolio is about 71,000 crore rupees.
HDFC and
ICICI were next to follow SBIs lead by launching similar low rate home loan schemes but later withdrew them when RBI showed disapproval regarding teaser rates. RBI was concerned with the ability of borrowers to repay at normal rates post the fixed rate of interest during initial years and the benefits of lower rates not symmetrically distributed among old and new customers.
RBI Deputy Governor Usha Thorat said, "Teaser rates by banks is a cause of concern. Banks must ensure that borrowers can service higher rates when rates return to normal"
and K C Chakrabarty said, "We have no concern on teaser rates...you (banks) tease both new and old customers...don't leave out one segment.
