ICICI Bank quite Special Home Loan Scheme

ICICI Bank hiked home loan rates by 50 basis points effective October 1, 2010. The bank has also discontinued its special home loan (fixed and floating) scheme.

ICICI Bank, however, did not respond to an email sent to the bank.

Senior bank officials confirmed to Financial Chronicle that they have now discontinued their special home loan scheme that carried a fixed rate of interest for the first two years.

The scheme had offered a rate of 8.25 per cent for the first year and 9.25 per cent for the second year, after which it reverted to the floating rate of the bank.

IDBI Bank and Allahabad Bank have also hiked their home loan rates by a similar 50 basis points.

The fresh round of interest rate hike comes close on the heels of the recent hike in their deposit rates in the range of 25-75 basis points for varying tenures. This followed an increase in their cost of funds after the central bank raised the rate at which it lends to banks.

Mortgage lender HDFC hiked interest rate by 0.5 per cent to 9.25 per cent floating in September, 2010. HDFC had a special home loan, under which loans will be available at a fixed rate of 8.50 per cent 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.

State Bank of India (SBI), the largest lender in the country, has extended its special home loan scheme to December 31, 2010. It has also not hiked its base rate, keeping it at 7.5 per cent. The special home loan offers loans at 8 per cent for the first year, and then 9 per cent for the next two years after which it will revert back to the floating rate of interest that would be decided by the bank. Meanwhile, IDBI Bank and Allahabad Bank hiked their base rate from 8 per cent to 8.5 per cent.

Base rate is the minimum rate at which the banks will lend to its customers.

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.


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