Banks persist with hybrid loans despite poor response
However, analysts believe otherwise. “In a hybrid rate loan, the customer is charged higher interest rates during the fixed period. Last year, customers thought they would escape the volatility in interest rates by locking themselves with these hybrid products, while lenders started cutting home loan rates this year. Hybrid loan customers were not able to take benefit of these cuts,” said an analyst from a local brokerage.
Recently, many public sector banks reduced rates on home and other retail loan products in the festive season. Customers who had opted for a hybrid product late 2011 would not be able to take advantage of these reductions. New borrowers are, therefore, preferring to go for fully floating loans.
ICICI Bank, launched a dual rate home loan product for its customers in August last year. Last month, the bank modified this product in such a way that customers could renew the home loan to a complete fixed rate one after the initial fixed period was completed. An email query to ICICI Bank regarding the performance of this product remained unanswered.
Axis Bank had launched a fully fixed rate home loan product, Nishchint, in September last year, where customers could get home loans
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