ICICI Bank's new home loan product is not a teaser scheme though it has fixed and floating components, said Ms Chanda Kochhar, Managing Director and Chief Executive Officer.
There is no differential rate as the rates offered under this scheme are the same as the bank's regular floating rates, she said.
Speaking to reporters on the sidelines of the FICCI-IBA seminar, Ms Kochhar said that the product has been offered as an option for customers to lock into a fixed interest rate for one or two years. “The rate of interest gets fixed and additionally the spreads on the floating rates also get fixed. So, it is predictable,” she explained.
The scheme will allow customers the flexibility to manage their EMIs, she added.
Under the scheme, a customer can avail a home loan at a fixed interest rate valid for one year or two years, after which the loan will have floating interest rate.
Under the one-year fixed rate home loan, the interest rate is 10.5 per cent for loan up to Rs 25 lakh, 11 per cent for Rs 25-75 lakh and 11 per cent for loan of over Rs 75 lakh. Floating rate from the second year will be linked to the ICICI Bank Base Rate (IBase) plus margin decided at the time of sanctioning the loan.
Under the two-year fixed rate home loan, the rate is 10.75 per cent for a loan less than or equal to Rs 25 lakh, 11.25 per cent for a loan of Rs 25-75 lakh and 11.75 per cent for a loan amount greater than Rs 75 lakh. Floating rate from the third year will be linked to the I-Base plus margin decided at the time of sanction of the loan.
The interest rate cycle may be at the peak, Ms Kochhar added, but it is difficult to say when the rates will start declining.