Mumbai: Country’s largest private lender ICICI Bank on Thursday launched two home loan products, which give borrowers the option of having a fixed interest rate for up to the first two years of a loan.
“Fixed income rates will shield customers from frequent changes in home loan interest rates and protect them from any rise in interest rates over the next one or two years,” a bank statement issued here said.
The Reserve Bank of India (RBI) has raised its key short term rates a record 11 times since March 2010 in order to tame inflation. The headline inflation for July 2011 stood at 9.22%, much above RBI’s comfort.
As the RBI’s hikes get transmitted, retail borrowers are among the worst hit as domestic budgets go awry.
Under the new scheme, a borrower will pay an interest of 10.50% for a home loan under Rs25 lakh for the one year fixed interest rate and 10.75% per annum for the two year fixed product, it said.
On completion of fixed interest rate period, loans will turn floating in nature and will be linked to the bank’s base rate, it said, adding that borrowers will also have to pay a margin above the base rate, which will be decided at the time of loan sanctioning.
The new products will be available from Friday, the statement said, adding that the two fixed interest products are in addition to the already available floating products.