Despite the regulatory need for higher provisioning for teaser rate home loan scheme, the country’s largest bank State Bank of India (SBI) is likely to continue the scheme beyond December 30. However, the bank may raise the rates for the scheme.

Speaking top FE, a senior official said , ?Though we are yet to take final decision on whether to continue our teaser home loan scheme beyond December 30, we do favour continuing teaser home loan for some more time. There may be certain hike in the interest rate.”

The bank, whose base rate is currently at 7.60%, will also be taking a call on its revision.

The teaser home loan scheme has helped SBI boost its housing loan portfolio

The bank has been able to garner a sum of Rs 28,000 crore through the scheme since it was launched in February, 2008. The average growth of the home loan was around Rs 400-500 crore before the launch of the teaser home loan and went up to Rs 1,700-1,800 crore in its peak after the launch of the scheme.However the rate of disbursement for home loan came down to Rs 1,400-1,500 crore afterwards.On the home loan business, the official said there was a slight thaw in the market as housing prices had become unaffordable. Hence, the real estate market was likely to grow only when there was some correction in it, he added.

However, PNB will close its existing teaser home loan scheme on December 31. The bank was charging 9% interest rate, which is its base rate too, for loans up to Rs 30 lakh for the first five years.

From sixth year onwards, the bank charges an interest rate of 10.25% for floating and the interest rate is increased by 50 bps in the case of fixed rate of interest.

From January 01 onwards, the bank would be charging a floating interest rate of 9.5% for home loans up to Rs 30 lakh repayable over a period of 5 years and in case of fixed interest rate, the bank will charge an interest rate of 0.50 % in addition to it, said an official of the bank.

The bank’s growth in the home loan was 19% y-o-y in December, added the official. “We see a good demand from the real estate sector, but the demand was not moving,” added the official.

With Reserve Bank of India(RBI) acting tough, finally ICICI Bank and HDFC had ended their home loan teaser rates on Dec 1.HDFC’s scheme of dual rate home loan, which had been extended couple of times earlier was to expire on November 30 and wouldn’t not be extended, said the sources SBI and PNB were the only two major player in the housing finance market which have a teaser rates for home loan.

However OP Bhatt, chairman, SBI had already indicated that the bank would take a call on its teaser rates during December end.