It is unlikely that the competition on teaser rates for housing loans by banks will end soon. After withdrawing the teaser rates for the housing loans in the beginning of month, ICICI Bank relaunched the scheme on Thursday. The bank now offers 8.25% for first year , 9% for second year and prevailing floating rates for the rest of the year.
Meanwhile, the country?s largest lender, State Bank of India (SBI), may also continue its existing teaser home loan scheme even after April 30, which is the expiry date for the prevailing scheme.
Talking to FE on condition of anonymity a senior SBI official said, ?Though it all depends on our asset liability committee?s forthcoming meeting to take a final call on the subject, there is a likelihood that we may continue with the present teaser scheme even after April 30.??
Bank?s total home loans outstanding for 2009-10 stand at Rs 73,000 crore. The bank has disbursed Rs 22,000 crore of home loan during 2009-10 against Rs 9,000 crore a year ago. The bank has projected a 31 % growth in home loan to Rs 27,000 crore by the end of the current fiscal.
SBI chairman OP Bhatt had earlier said the bank would like to maintain its competitiveness on home loan front as it has a lot of potentials for the bank
The SBI official said bank?s ALCO will deliberate the issues like liquidity and interest rate movement while taking a call whether to extend the existing scheme.
The bank already enjoys a market share of 19% in the home loan segment as on 31 December, 2009. As per the existing scheme, the bank charges 8.25% of interest for the first year and 9% for the second and third years and then the rates will be brought to the then floating rates which will be 1.75% below SBAR.
In case of pre payment on completion of first three years, the SBI doesn?t charge any amount from its borrowers unlike its peers that normally charge 2% of the loan amount. Even though the RBI has sucked out liquidity amounting to Rs 3,000 crore from the bank by increasing the cash reserve ratio (CRR) by 25 bp during latest annual policy announcement, the bank was still having liquidity worth of addition Rs 20-25,000 crore in addition.
?Unlike our peers who reset their rates on quarterly basis, we reset our home loan rates only when our SBAR changes, said the official. However, our rates for the entire loan period may not go beyond 9.5%, claimed the official.
