Pricing on `HSBC Home Loans' will be at a fixed 16 per cent or at a floating rate pegged to the bank's prime lending rate currently at 15.5 per cent for loan amounts ranging between Rs 2 lakh and Rs 1 crore at the top end. The scheme offers customers the facility to move from either of the options once a year at no additional cost, and is the lowest priced with interest calculated on a daily reducing balance basis. Processing-fee is pegged at 1.8 per cent, and on approval of the loan amount.

HSBC's offering will cover financing for under-construction property, procurement of land, term-loan against property for business or personal use, overdraft against property and home renovation.

A key feature of HSBC'sproduct is that the interest charged will not vary with the loan amount availed of. Fixed or floating rate, the interest will not vary according to the size of the loan. "This would allow customers, especially those in the metros to go in for a bigger loan amount," HSBC's manager-retail assets and personal banking, Rajiv Jamkhedkar said. The HSBC personal home loan product is to be retailed across the bank's 22 branches in Mumbai, Calcutta, Chennai, New Delhi, Bangalore, Vishakapatanam and Gurgaon.

Internal studies of HSBC reveal that the housing industry is growing at an average rate of 20 per cent per annum, and is expected to grow so over the next three years. Explaining the rationale for offering both fixed and floating rate option, HSBC's deputy chief executive officer, ZJ Cama said: "It allows the customer the flexibility of exiting out of a higher interest rate and locking into a lower one, if rates so move. There is no reason for customers to get locked at a higher rate and continue to be so.Repayment is a key issue and HSBC allows that flexibility".

HSBC's chief executive officer while stating that "the bank sought to grow its personal banking side", added that its home loans are so packaged that it allows for considerable cross-sell".

Bundled along for HSBC's housing loan clientele is free savings' bank accounts, automatic teller machine facility, credit card joining-fee waiver and preferential rates for other products like car loans.

"We intend moving up to a cross-sell ratio of 5 to 6 per cent over the next few years," said John, adding: "home loans are a core retail banking product. Unlike other products, like say car loans, housing loans have an emotional hold, and this presents the bank with an opportunity to deepen existing relationships".