Private sector lenders ICICI Bank and HDFC Ltd today discontinued with teaser home loans — under which customers get credit at concessional rates for the first few years — in a move that reflects RBI’s concern on such loans.
It could not be ascertained whether state-run SBI, which pioneered this scheme, too would be discontinuing with the concessional rate scheme.
According to sources, HDFC’s scheme of dual rate home loan, which was to expire today, will not be extended.
ICICI Bank has withdrawn the teaser rates on home loans with immediate effect, an ICICI Bank spokesperson said.
Under teaser rate, HDFC offered home loans at a fixed rate of 8.5 per cent up to March 31, 2011, 9.5 per cent for a period between April 1, 2011 and March 31, 2012 and the applicable floating rate for the balance term.
Similarly, ICICI Bank had offered a rate of 8.5 per cent in the first year, 9.25 per cent in the second year and 1.5 per cent over and above the base rate in the third year.
It may be recalled that in its policy review meeting last month, RBI had voiced concern over the high risk of default on loans offered at teaser rates.
However, then many banks had expressed reservations, arguing that loan off-take would be impacted adversely.
The move by the top two private sector banks would temper the demand for housing loans and eventually help cool real estate rates in an economy faced with high inflation.
Categories: Personal Finance