The much publicized teaser home loan scheme offered by the State Bank of India (SBI) will be discontinued by the end of April 2011. SBI will henceforth replacehttp://www.blogger.com/img/blank.gif the interest rates of its teaser loans with floating interest rate schemes. SBI’s floating interest rate schemes will be similar to the ones that are currently offered by commercial banks and housing finance companies. From May 1 2011 onwards SBI will offer housing loans at an interest rate of 9.5-10.25 per cent. However the loan amount will determine the exact interest rate slab. For loans upto Rs 30 lakh an interest of 9.5 percent will be charged which is one percentage more than the current base rate of SBI. For loans above Rs 30 lakh but within the 75 lakh bracket, an interest of 9.75 percent will be charged which again is 125 basis points more than the basic rate. An interest rate of 10.25 percent will be charged for loans above Rs 75 lakh and that will be 175 basis points above the basic rate. Interest rates will however vary according to the changes that occur in the base rate due to quarterly review.
It was the Reserve Bank of India which asked banks to do away with teaser loan rates because according to the central bank these loans made an impact on the asset quality of the home loan portfolio of banks.
It was the Reserve Bank of India which asked banks to do away with teaser loan rates because according to the central bank these loans made an impact on the asset quality of the home loan portfolio of banks.
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