Fixed-rate home loans brought back by leading lenders
Bigwig lenders like HDFC, ICICI bank, and Citibank have recently revealed that they have brought back fixed –rate home loans.
The decision by leading lenders to re-introduce fixed-rate home loans underscores a significant move because, until recently, such loans had almost disappeared from the home-loan scenario. Even though some lenders offered these loans, borrowers were discouraged because the fixed-rate home loan option was priced nearly one percentage point above floating-rate loans.
Bringing back fixed-rate home loans, HDFC has revealed that it is now offering partially fixed-rate loans, in which the rate of interest has been set at 10.25 percent for first two years — an interest rate which is close to pricing of the company’s floating-rate loans of 10.15 percent.
Similarly, ICICI Bank is also offering home loans up to 10 years at a fixed rate of up to 10.25 percent, which too is not much higher than the company’s 10.15 percent rate charged from floating-rate customers.
Citibank, meanwhile, is offering a fixed rate of 10.15 percent till September 2015. After that, the company will charge a variable rate on home loan product.
About the benefits of fixed-rate home loans, Sukanya Kumar – director of loan advisory firm retaillending.com – said: “A fixed-rate loan is ideal for someone who has limited capacity and limited resources. These borrowers are typically those who are certain that they will not prepay their loan before time and would not like to run risk of rates going up some time in future.”
Source – The Economic Times
Citibank, fixed rate, Fixed Rate Home Loan, Fixed rate of return, Floating-and-fixed rate loan scheme, HDFC, ICICI Bank
