ICICI Bank said in an statement, ''Home loans can fix the rate for a year at 10.5% for loans of up to Rs. 25 lakh, 11% for loans of Rs. 25-75 lakh and 11.5% for loans of more than Rs. 75 lakh.If customers want to fix the rate for two years, the applicable rates will be 0.25% higher. So, under the two-year fixed rate home loan, the customer can avail a loan at 10.75 per cent for a loan amount less than or equal to Rs 25 lakh, 11.25 per cent for loan above Rs 25 lakh up to Rs 75 lakh and 11.75 per cent for a loan amount higher than Rs 75 lakh.
The rates will readjust to the bank's base rate “plus margin decided at the time of sanction of the loan“ after the fixed period"
The ICICI Bank is offering usual floating rate home loans in a band of 10.5% to 12%, depending on the loan tenure and amount.
The bank stopped offering home loans at a fixed rate of 8.25% for two years in March 2010, just before interest rates started to rise. Since then, the RBI (Reserve Bank of India) has raised interest rates 11 times, totalling 4.75%.
This year, ICICI's larger competitors in the mortgage market SBI (State Bank of India ) and HDFC (Housing Development Finance Corporation ) also ended similar schemes after criticism from RBI.
The RBI said the banks were offering loans at “teaser rates“ to lure customers to take loans they may not afford in future.
The SBI does not offer fixed rate loans currently, while HDFC's fixed rate for loans of up to Rs. 30 lakh is 12.25%, Rs. 30-75 lakh is 12.50% and above Rs 75 lakh is 13%.
One of the ICICI Bank's spokes person said. “This new product allows people to comfortably manage their finances and is at the current market rate, so is not a teaser rate,“
while HDFC said it may consider the product if it sees a demand.
After the fixed-rate tenure ends, the floating rate would be linked to ICICI Bank’s base rate, plus the margin decided at the time of sanction of the loan.
ICICI Bank’s base rate is 10 per cent, while the Home loan floating rate is 10.5-11.5 per cent.
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