With base rate coming into effect from 1st July 2010, an increase in home loan rates seems anticipated.
There is a likelihood that teaser home loan schemes including the one offered by State Bank of India (SBI) which carries 8% rate of interest for the 1st year and 9% for 2nd and 3rd years may also see an increase as lending below base rate might not be allowed by the banking regulator, RBI.
SBI has said that its base rate would be somewhere about 8%. Most banks are actually waiting for SBI’s rate before fixing their base rates. The rate is anticipated to be about 8.25 to 8.5% for other banks.
In a meeting, the bankers decided that they may have to increase home loan rates after the inclusion of base rate. A bank executive said, the home loan scheme of SBI would be examined towards the month end when the teaser scheme is about to end.
SBI carried on providing teaser loans to its customers while all other banks stopped it due to the excess liquidity with the bank. But now, the excess liquidity seems to have vanished with banks again using the repo window of RBI.