The monetary policy announced some time ago had included some monetary tightening steps like increase in the cash reserve ratio (CRR) and in the repo and reverse repo rates. The RBI has taken these steps to regulate the rising inflation rates of the country.
But till date, the banks have protected the home loan borrowers from the effects of the stringent monetary tightening steps. The banks have not yet increased the home loan rates due to adequate liquidity prevalent the system and poor credit offtake.
In order to help the home loan borrower, banks are providing teaser loan schemes which charge fixed interest rates at low levels for the initial period and then the loan becomes a floating one. Though all other banks have scrapped this scheme, the country’s biggest lender, SBI still offers this scheme till June 2010.
This period is a good alternative for home loan borrowers. They can gain from a loan scheme in numerous ways such as going for a scheme with a visible timeframe such as 3 years of fixed interest rate etc.
Also the borrower can commence repayment of his loan quickly. The teaser loans are actually excellent for those borrowers who want to prepay their loans during the initial 5-6 years.
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