ICICI Bank ends special home loan scheme

ICICI Bank, the country’s largest private sector bank has revised its home loan rates. The bank has hiked its home loan rates by 50 basis points also it has discontinued its special home loan (fixed and floating) scheme. The new rates are effective from 1October, 2010.

ICICI Bank senior bank official has confirmed about discontinuation of their special home loan scheme in which bank offered fixed rate of interest for the first two years.

Under the scheme bank was offering 8.25percent for the first year and 9.25% for the second year, thereafter the rate was reverted to the floating rate of the bank.

Other banks that have hiked their home loan rates by a similar 50 basis points include IDBI Bank and Allahabad Bank. IDBI Bank and Allahabad Bank hiked their base rate from 8 per cent to 8.5 per cent.

An IDBI Bank official said the cost of funds has gone up, in line with RBI's rate hike. "We have also hiked our deposit rates," the official said.

The banks are hiking their deposit rates in the range of 25-75 basis points for varying maturities. After the Reserve Bank of India (RBI) had raised the rate at which it lends to banks, the cost of funds of banks increased which has resulted in the revision of interest rates.

HDFC Bank, a mortgage lender had raised its interest rate by 0.5% to 9.25% floating in September, 2010. Bank under special home loan is offering loans at a fixed rate of 8.50 percent, will be available up to the end of this financial year, 9.50 per cent for financial year 2011-12 and the applicable floating rate for the balance term.
Meanwhile, SBI the largest public sector bank has extended its special home loan scheme to December 31, 2010. But it has not hiked its base rate, which is at 7.5%. Under its special home loan scheme bank is offering loans at 8 per cent for the first year, and then 9 per cent for the next two years thereafter it will revert back to the floating rate of interest that would be decided by the bank.