ICICI Bank on Thursday launched two home loan schemes, which give an option of fixed interest rate for up to first two years of the loan period, a step to protect borrowers from rising rates for a limited period.
“Fixed income rates will shield customers from frequent changes in home loan interest rates and protect them from any rise in interest rates over the next one or two years,” ICICI Bank said in a statement.
The loan products have some characteristics similar to teaser home loan schemes, which was discontinued last year, but the bank said there was no similarity as the interest rate of these two products are same as the existing floating rates.
Teaser rate is a special loan scheme under which a concessional rate is offered for a limited period to attract customers.
Under the one year fixed rate scheme, a borrower will pay an interest of 10.50 per cent for a home loan under Rs.25 lakh. For two year fixed rate home loan the interest rate would be 10.75 per cent.
In both cases on completion of fixed interest rate period, loans will turn floating in nature and will be linked to the bank's base rate, it said, adding that borrowers will also have to pay a margin above the base rate, which will be decided at the time of loan sanctioning.
The new products will be available from Friday, the statement said, adding that the two fixed interest products were in addition to the already available floating products.
It is to be noted that the Reserve Bank of India has raised its key short-term rates a record 11 times since March 2010 in order to tame inflation.
The headline inflation for July 2011 stood at 9.22 per cent, much above RBI's comfort level. As the RBI's rate hikes get transmitted, retail borrowers are among the worst hit as their budgets go awry.
