SBI likely to extend ‘teaser’ home loan scheme

State Bank of India, the country's largest lender, may extend its teaser home loan scheme for yet again beyond 30 September, when it was supposed to expire. However, a final decision will be taken at its asset-liability management (ALM) committee meeting later this month.

SBI managing director S K Bhattacharyya said the scheme has been a profitable one for the bank and there is no reason to discontinue the facility. ''Why shouldn't we continue with the scheme? We received overwhelming response from borrowers and we are happy what we did,'' he said on the sidelines of a banking seminar organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) in Kolkata on Monday.

SBI offers home loans at 8 per cent for first year, 9 per cent for second and third years, and 1.75 per cent above the base rate from fourth year for loans up to Rs50 lakh. SBI's base rate now stands at 7.5 per cent a year.

HDFC, which is SBI's biggest competitor in the home loan arena, has in the last week raised its retail prime lending rate by 50 basis points, and this would increase its floating home loan rates by 50 bps. Following the rise in HDFC's benchmark rate, its fresh home loans up to Rs30 lakh are now available at 9.25 per cent a year, loans between Rs30 lakh and Rs50 lakh at 9.5 per cent, and loans above Rs50 lakh at 9.75 per cent per annum. HDFC has discontinued with its special dual rate schemes that guaranteed low interest rates for first two years.

SBI launched the teaser rate scheme in August 2009 and has extended the deadline for the facility half a dozen times with a little tweaking of the scheme.

Punjab National Bank, the second-largest public sector lender, has launched a teaser rate home loan plan with 8.5 per cent rate for first three years of the loan tenure for loans up to Rs50 lakh.