A recent press report said that ICICI bank is offering a new home loan with a rate for two years fixed at 10.75%. ICICI bank pulled back from aggressive retail lending after the 2008 credit crisis will now offer loans that give a choice of fixed rate for either one or two years at a differential rates for various slabs. Further the report also said the year fixed rate plan, a customer will pay 10.50% for a Rs.25 lakh loan, 11% for loan up to Rs 75 lakh and 11.50% for higher loans. Subsequently from the second year the rate will be linked to ICICI’s base rate and under the two year offer, the rate will be 10.75% for loans up to Rs 25 lakh, 11.25% for up to Rs.75 lakh and 11.75% for higher loans.
The report also offered from ICICI whose home loan assets have shrunk 17% from the 2008 peak, may prompt rivals to come out with similar ‘teaser loans’.
As per the report an analyst at a brokerage said that it need not be a teaser rate, but it could become a trap rate. Further if a customer goes for it now he won’t be able to get out of it even if the rate falls, which benefits the bank.