Mumbai:

Two days after the Reserve Bank of India indicated an increase in interest rates, ICICI Bank cut home loan rates by bringing back its old teaser home loan rate product till the end of the month.

The move comes close on the heels of HDFC bringing back last week a variation of its teaser loan programme, which it had disbanded a couple of months ago.

The move by ICICI Bank comes after the central bank indicated a rate hike after increasing rates by 25 basis points. It increased its cash reserve ratio, repo and reserve repo rates. Most banks, including ICICI Bank, had post the policy, said rates would go up depending on the demand. The country’s second-largest bank could have re-introduced its old rates because of a fall in demand as property prices have gone up sharply over the past few months and the spike in interest rates because of the withdrawal of teaser rates by most institutions.

Under the old scheme which it has now re-introduced, ICICI Bank has offered 8.25% for two years. From the third year, it would have been floating reference rate minus 3.5%. The current reference rate is 12.75%. The bank currently offers floating rate loans at 8.75% up to Rs 30 lakh, 9% from Rs 30-50 lakh and 9.5% for above Rs 50 lakh. ICICI Bank officials refused to comment on the interest rate changes.

Under the new scheme of HDFC, which was introduced last week, borrowers can avail of loans at 8.25% till the end of the current financial year and 9% till March 31, 2012. This is marginally higher than the previous scheme where HDFC had offered customers an interest rate of 8.25% till March 31, 2012. SBI had also increased rates while extending the scheme till the end of April. It currently offers a fixed rate of 8% for first year and 9% for the second and third year, irrespective of the loan amount.

In the earlier scheme, SBI had offered a fixed rate of 8.5% for the second and third year if the loan size was less than Rs 50 lakh and charged 9% for loans above Rs 50 lakh in the second and third year. LIC Housing Finance also has a special loan scheme which offers 8.9% for three years.

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