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SBI Puts an End to its Teaser Home Loan

by Paul Joseph April 27, 2011 Uncategorized

State  Bank of India (SBI) will put to an end to its puzzled home loan schemes by the end of April 2011. The interest rates offered on its home loans will now be recalled by floating interest rate schemes, which are comparable with those offered by  other commercial banks and housing finance companies. All loans from May 1 will  draw an interest rate of 9.5-10.25 per cent, depending on the loan amount.  Loans up to Rs 30 lakh will be available at 9.5 per cent (one percentage point  above their base rate). Loans in the Rs 30-75 lakh range will be charged 9.75  per cent (125 basis points above the base rate). And, those above Rs 75 lakh  will be charged 10.25 per cent (175 basis points above the base rate). Though,  these rates would move in line with the changes in the bank’s base rate that is  reviewed every quarter. Earlier,  the RBI had asked banks to stop giving teaser loan rates,  since it believed such loans would blow the asset quality of the bank’s home  loan portfolio. Puzzled loans offer advances at a comparatively lower rate of  interest for the first few years, after which rates were re-set at higher  rates. SBI is the last one to discontinue such special loans. Under its SBI  Easy Home Loan and SBI Advantage Home Loan products, one could get loans for  8-8.75 per cent in the first three years. After the third year, the rates would  get reset at the current floating rate structure. At 8.75 per cent, a  20-year-old loan on Rs 30 lakh would come to Rs 884 a lakh. At 9.5 per cent,  you would now be paying Rs 932 a lakh. Those who already have SBI’s puzzled home loans  and are still in the initial three years, the old rates remain applicable. The  new rates will only apply to new applicants. Among the housing finance  companies, LIC Housing Finance is still offering a fixed interest rate of 9.9-10 percent for the first five years and, thereafter, the existing rates will apply. A quick calculation on apnaloan.com showed that the average  rate for a 20-year period still works out in SBI’s favor. The average rate for  SBI was 9.5 percent, while that for LIC Housing was 10.5 percent for the same period.

Tagged as: 20-year-period, after-the-third, bank, base, blow-the-asset, housing, housing-finance, india, loans, reviewed-every, sbi

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SBI to End its Teaser Home Loan Scheme on April 30th 2011

by Paul Joseph April 26, 2011 Uncategorized

State Bank of India (SBI) will discontinue its teaser home loan schemes from the end of this month. The interest rates offered on its home loans will now be replaced by floating interest rate schemes, which are comparable with those offered by other commercial banks and housing finance companies. All loans from May 1 will attract an interest rate of 9.5-10.25 per cent, depending on the loan amount. Loans up to Rs 30 lakh will be available at 9.5 per cent (one percentage point above their base rate). Loans in the Rs 30-75 lakh bracket will be charged 9.75 per cent (125 basis points above the base rate). And, those above Rs 75 lakh will be charged 10.25 per cent (175 basis points above the base rate). However, these rates would move in line with the changes in the bank’s base rate that is reviewed every quarter. Earlier, the Reserve Bank of India had asked banks to stop giving teaser loan rates, since it believed such loans impacted the asset quality of the bank’s home loan portfolio. Teaser loans offered advances at a comparatively lower rate of interest for the first few years, after which rates were re-set at higher rates. SBI was the last one to discontinue such special loans. Under its SBI Easy Home Loan and SBI Advantage Home Loan products, one could get loans for 8-8.75 per cent in the first three years. After the third year, the rates would get reset at the then current floating rate structure. At 8.75 per cent, a 20-year-old loan on Rs 30 lakh would come to Rs 884 a lakh. At 9.5 per cent, you would now be paying Rs 932 a lakh. The good news is that for those who have already availed SBI’s teaser home loans and are still in the initial three years, the old rates remain applicable. The new rates will only apply to new applicants. Among the housing finance companies, LIC Housing Finance still offers a fixed interest rate of 9.9-10 per cent for the first five years and, thereafter, the then prevailing rates are applicable. But a quick calculation on apnaloan.com showed that the average rate for a 20-year period still works out in SBI’s favour. The average rate for SBI was 9.5 per cent, while that for LIC Housing was 10.5 per cent for the same period. SBI has also said there would be no prepayment penalty on home loans. The bank used to charge customers a two per cent penalty on prepaying the home loan. It will also introduce a graded processing fee, which it will increase according to the loan amount.

Tagged as: advantage-home, after-the-third, bank, commercial, home-loans, housing, india, loan, offered-on-its, real estate, sbi

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SBI’s Much Debated Teaser Home Loan Rates to Continue till May

by Paul Joseph March 28, 2011 Uncategorized

State Bank of India’s (SBI) much-debated teaser home loan rates may see a hike in rates by May, when the next monetary policy review would be announced by the Reserve Bank of India (RBI). But unless there is a hike in rates during the review, SBI will retain the teaser home loan rates, said a senior official with the bank. The RBI had in the past expressed its reservation on the teaser rates offered by SBI, on the grounds that such aggressive rates would push up housing prices. The teaser home loan rates, or special rates as the bank’s chairman OP Bhatt prefers calling it, was a mixture of fixed and floating interest rates where the customers were charged 8.75 per cent in the first year, 9.50 per cent in the second and third years and the prevailing floating rates from the fourth year onwards. “The recent economic survey has also come in support of the rates as they helped in making housing available to a large number of people. So we don’t see any reason to discontinue this scheme. However the rates may be stepped up whenever the base rate increases,” the official told Financial Chronicle. Since RBI is faced with the huge challenge of taming inflation, the movement of inflation will determine whether the base rates will see a hike during the next monetary policy review, scheduled for May 3. The teaser rates by SBI have been seeing a steady rise with every base rate hike. It started with 8 per cent in the first year and 9 per cent in the second and third year, when the scheme was originally announced by SBI last year. Private banks like ICICI Bank and HDFC too announced similar schemes but could not continue with it after a certain period with the rising interest rates. SBI however continued with the scheme though it has effected a 50-75 basis point hike since then. However, when compared to fixed rates of 11.50 to16 per cent and floating rates of 9.75 to 10.50 per cent offered by most banks, the teaser rates are certainly more attractive.

Tagged as: bank, banking and finance, base, financial, from-the-fourth, home-loans, india, property prices, real estate, real estate developers, real estate india, reserve, scheme, teaser

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Fixed or floating is good

by Paul Joseph January 18, 2011 Uncategorized

Fixed loans are neither completely fixed nor completely floating floating loan. So before taking a home loan requires that all the conditions the bank may well have known. Home loan interest rates in respect of two of you have heard about. First, the floating rate and second, the fixed rate. Fixed rate means that the loan period you pay the same interest, while floating rate interest rate of interest per Amaceert curves – moves. The only advantage the new Kastemrs Amaceert the interest rate on low rates for Kastemrs not have taken floating rate decreased darted, but the company’s lack of danka interest loans to entice new customers only are beaten. So get all the benefit only to new Kastemrs. For older Kastemrs Taking bank loans on floating rate home loan interest rates for construction Kastemrs does not reduce, the old client re – choose option pricing. Under the interest rate on their loans reduced will be equal to the new Kastemrs. Yes, for sure they will pay the bank fees. Aadjstemento around the Case of floating rate Aadjstemento it also depends on the time. Suppose that a bank has been floating rate every six months Aadjste Kavugtleeerr or later it began to be adjusted on monthly basis. Kastemrs So every quarter or month to take advantage of floating rate conversion fee will have that the rest of the loan amount may be half or one per cent. Fixed also not Fix Like the floating rate are not actually floating, the more fixes are not the same as fixed rate, as many seem. Bank loan rate ever increase in agreement reserved the right to take her. Most bank loans by not paying for the entire period fixed for three years, fixed rate loans on offer. For three-year interest rate is stipulated. Then the interest rate per interest rate Amaceert Rivhaij is. What would be the right Suppose a person took a loan three years ago fixed rate. Six per cent fixed interest rate for three years he had make. After that happened, and now eight per cent Rivijan have had to pay interest. So feel bad that the Bank Fixed loans also have Rivhaij but also the fact that he then four per cent lower rates than floating rates, giving the Kastemrs be. Meanwhile, those who had taken loans on floating rate with the person, of any of them did not reduce interest rates in three years, while the Bank expressed its hope. He got a loan at seven per cent and today he is forced to pay 12 per cent interest. So whether it should assume that the fixed rate is right to take a loan? Experts say that the fixes are not Fixed loan but if you market ups – and downs absolutely no idea if the right Fixed loan will be less interest in the long run if you estimate that if floating select. Middle ground Fluctuations in market interest rates that people – can not imagine downs, they should avoid floating loan. If they want to avoid than fixed loans, the third way is for them. Part of the loan amount they can carry on fixed rate and floating interest rates will be applied to the remaining amount. Hybrid loans it says. Switch Over If you got a loan at fixed rate and floating rate is significantly lower than if you shifted from fixed floating rate options can also choose to be. For this you will have half a per cent to two per cent fee. Suppose you passed a year in total duration of the loan after it Aswichowara If the remaining amount to your loan principal Amaunt EMI decided to assume the remaining time will be. The prospect of rising interest rates in the near future are, you will not be prudent to be shifted from fixed to floating rate

Tagged as: bank, interest-rates, loan, loans, person, remaining, time

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SBI Extends Special Home Loan Scheme till Dec 2010

by Paul Joseph September 29, 2010 Uncategorized

The State Bank of India (SBI), the pioneer of the special home loan scheme, has extended its special home scheme to December 31, 2010. “We did a cost analysis of our funds and realised that it is possible to continue with the special home loan scheme without being hit on our net interest margin,” a senior SBI official told Financial Chronicle. The special home loan offers loans at 8 per cent for the first year, and then 9 per cent for the next two years after which it will revert back to the floating rate of interest that would be decided by the bank. The special home loan scheme has held SBI in good stead with the home loan book of the bank being the largest at Rs 74,669 crore with the loan book growing by Rs 3,476 crore sequentially over the fourth quarter (year to date figure). During the quarter, the bank disbursed Rs 4,660 crore of home loans. The reason why banks will like to continue with the special home loan scheme is to give a push to the credit growth, which is still sluggish. The credit growth during the year from March to date has been around 11 per cent, with sudden spurts of credit growth in certain fortnight. SBI subsidiary State Bank of Hyderabad (SBH) on Tuesday reduced its home loan rate by 25 basis points. It will now offer housing loan at fixed rate of interest of 8.25 per cent for the first year as part of a housing loan campaign valid till November 15. According to the bank, this is a move towards giving continued thrust to the housing loan portfolio and to cash-in on surge in home buying during the festive season. Under this campaign, SBH will offer a fixed rate of interest at 8.25 per cent for first year, 9.25 per cent (floating) for second and third year for loans up to Rs 50 lakh. For loans above Rs 50 lakh, the bank will offer floating rate of interest at 9.5 per cent for second and third year. From the fourth year onwards, the rate is linked to the base rate, which effectively works out to be 9.75 per cent for loans up to Rs 50 lakh and 10.75 per cent for loans above Rs 50 lakh at present. Further, SBH is also offering 50 per cent concession in the processing fee during the campaign. Bhagwathi Rao Sandilya, assistant GM (personal banking) at SBH, said, “We feel that existing market conditions are conducive for this campaign. During Dussehra and Diwali, there is a spike in home buying. Therefore, we want to cash in on this trend with the reduced teaser rate. However, we don’t intend to extend this offer beyond two months in the hardening interest rate environment. We expect housing loan business to the tune of Rs 300 crore from this campaign alone.” According to Sandilya, SBH has over 1 lakh home loan accounts with a portfolio size of Rs 5,280 crore as of August 2010. The total business of SBH has crossed Rs 134,000 crore. The bank has a network of 1,218 branches.

Tagged as: bank, delhi, financial, fourth, housing

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SBI may extend teaser home loan scheme

by Paul Joseph September 7, 2010 Uncategorized

State Bank of India (SBI), the country’s largest lender, may extend its teaser home loan scheme, though a final decision will be taken at its ALM (asset-liability management) committee meeting later this month. The concessional home loan scheme is due to expire on September 30. “Our home loan scheme has been immensely successful, and why should we not continue with it?” SBI Managing Director S K Bhattacharyya said on the sidelines of a banking event organised by the Federation of Indian Chambers of Commerce and Industry here on Monday. “It is a good scheme. We have overtaken all others in home loans. Till now, we have not taken any decision on extending the scheme. The final decision will be taken at the ALM meeting in September,” he further said. The scheme was originally supposed to end by April 30, but was extended till June, and then again till September, owing to the huge demand. Under the scheme, for the first year, home loans carry an eight per cent interest rate, which rises to nine per cent in second and third years. From the fourth year onwards, home loans up to Rs 50 lakh will be charged 9.25 per cent, while higher loans will be charged 9.75 per cent. The bank had fixed its base rate, the minimum lending rate, at 7.5 per cent. Bhattacharyya said credit demand was good, particularly in sectors like power. PCR 70% by Sept 2011 SBI expected to meet the provision coverage ratio (PCR) of 70 per cent by September 2011. At present it is about 59.5 per cent. “We will reach the 70 per cent target of PCR by September 2011. That is the target we have given,” Bhattacharyya said. Rights issue SBI was also pushing for rights issue in the present financial year. “We are trying. We have written to the government on the rights issue, but everything depends on the government,” Bhattacharyya said on being asked if the rights issue would happen this year. The government holds a 59.4 per cent stake in SBI. The bank expects 20 per cent of its net income to come from international operations in the next two years. At present, the bank’s international operations account for about 12 per cent of the bank’s net income. Source: http://www.business-standard.com/india/storypage.php?autono=407182 Filed under: Home loans Tagged: Home loans , SBI

Tagged as: bank, home-loans, industry, per-cent, sbi

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Allahabad Bank offers festive season rebate up to 1% on loans

by Paul Joseph September 2, 2010

NEW DELHI: State-owned Allahabad Bank today said borrowers will get an interest concession of up to 1 per cent on loans during the festival season, which it hopes will attract new customers. While the interest rebate offered by the bank on housing loans under the floating rate scheme varies from 0.25 per cent to 1 per cent, new borrowers taking out loans under the fixed rate scheme will get a concession of 0.50 per cent to 1.75 per cent for a limited period, Allahabad Bank said in a statement. At present, housing loans up to Rs 50 lakh at a floating rate are available at 10.25 per cent interest for a period of 15 years, while fixed rate loans of the same maturity and amount are available at 12.5 per cent. The announcement comes days after a few banks, including Punjab National Bank, launched a festival bonanza for their customers. PNB has offered floating home loans at a fixed rate of 8.5 per cent for three years. At the same time, Allahabad Bank has also reduced the interest rate on car loans for new vehicles by 1 per cent, it said. Under normal circumstances, the Kolkata-based lender provides car loans at an interest rate between 10.5 and 11 per cent. The saral loan scheme, personal loans for doctors and pensioners and housing loans for furnishing will also get a rebate of 1 per cent, it said. The concessional offer is valid from September 1 to December 31, 2010, it said. The special festival offer will encourage customers, especially from middle and lower income groups, to avail credit at reduced interest rates to fulfill their requirements during the festival season, it said. Meanwhile, Allahabad Bank has been conferred with the national award for excellence in MSE lending for 2009-10 instituted by the Ministry of Micro, Small and Medium Enterprises (MSME). The award was received by Chairman and Managing Director J P Dua from the President of India yesterday. The award reinforces the bank’s commitment and consistent contribution to overall economic development of the country through faster growth of MSMEs and other priority sectors, Dua said. Source: http://economictimes.indiatimes.com/personal-finance/loan-centre/home-loans/Allahabad-Bank-offers-festive-season-rebate-up-to-1-on-loans/articleshow/6475075.cms Filed under: Home loans Tagged: Allahabad Bank , Home loan interest rates

Tagged as: bank, chairman, country, home-loans, ministry, president, punjab-national, requirements

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No loan can be advanced below the new benchmark rate

by Paul Joseph August 25, 2010 Uncategorized

The Reserve Bank of India has said a bank will have to honour a fixed rate contract, even if interest rates move up in future. The clarification has removed doubts that some banks had over introduction of fixed rate home loans. Customers of some banks feared that if the lender’s base rate rose above the contracted fixed rate, the bank might increase the loan rate citing RBI guidelines even though the loan was termed as ‘fixed rate’ . The central bank has said no loan can be advanced below the new benchmark rate. Banks like Punjab National Bank, State Bank of India and ICICI Bank are offering fixed rate home loans, but customers were worried that they may be charged a higher rate of interest rate if the base rate goes up since no bank is allowed to lend below the base rate. However, RBI has said at the time of contracting a fix rate loan if the lending rate (under the special scheme) is higher than the base rate, banks do not need to charge higher rate even if the lenders raise their base rate in future. Banks like Punjab National Bank, State Bank of India and ICICI Bank are offering fixed rate home loans, but customers were worried that they may be charged a higher rate of interest rate if the base rate goes up since no bank is allowed to lend below the base rate. However, RBI has said at the time of contracting a fix rate loan if the lending rate (under the special scheme) is higher than the base rate, banks do not need to charge higher rate even if the lenders raise their base rate in future. However, RBI has also told banks that if they hike or lower base rate, that increase or cut in rates will have to be passed on to the new customers under the special home loan scheme. Therefore, if PNB raises its base rate, to say 9% in October, those special schemes cannot continue at 8.5%, however, the customer who have already availed loan at a fix rate of 8.5% before October, need not pay more Sources from the industry say PNB had asked for a clarification from RBI on this issue since they recently launched the festive offer and were keen to offer a fix rate scheme. The PNB fix rate offer is on loans up to Rs 50 lakh and from the fourth year onwards, the bank will charge home loan rate that is prevailing at that point of time for all its customers. Source: http://economictimes.indiatimes.com/quickiearticleshow/6425359.cms Filed under: Home loans Tagged: Home loans , National Bank , State Bank of India and ICICI Bank , The Reserve Bank of India

Tagged as: bank, home-loans, industry, lending, loan, punjab-national, reserve-bank

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Bank entitled to processing fees after loan sanction

by Paul Joseph August 18, 2010

I applied for a home loan from IDBI Bank. After submitting all required papers they sanctioned Rs19.77 lakh with validity up to March 31, 2010. But thereafter the bank asked for a lot of other documents. I am not in a position to submit some of the papers and thus, I took back the documents I submitted from the bank. Subsequently, I arranged funds from costlier sources. IDBI had taken Rs11,030 by cheque and Rs6,500 cash as processing fees. They did not given the loan but (did not even) even refund the Rs17,530 processing fees. Kindly advise on what I should do to get my processing fee back. — PM Pancholi Generally, banks verify the loan application forms and within 8-10 days inform the borrower if additional details are required. Based on this, a satisfied sanction is conveyed, clarifying terms and conditions. However, in the event that the bank comes across any new information on the borrower impacting the loan, it may review its sanction. The exact document /papers, which you are not in a position to produce is not known .Coming to your point about processing charges, IDBI Bank collects 1% as processing charges . The bank has done its job of processing and conveying its sanction. Having done this, it is entitled to the charges. The only way for you is to try by writing to the nodal officer of the bank explaining the circumstances under which you did not avail the home loan, and request for part-payment of processing charges. The bank’s terms and conditions do not provide for any refund of processing charges in case of non-availment, hence there is no guarantee that bank will consider your request favourably. Source: http://www.dnaindia.com/money/comment_bank-entitled-to-processing-fees-after-loan-sanction_1425010 Filed under: Home loans Tagged: Home loans

Tagged as: bank, home-loans

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Lakshmi Vilas Bank to enter home loan biz

by Paul Joseph July 1, 2010

MUMBAI: Lakshmi Vilas Bank (LVB) on Wednesday said it plans to float a housing finance subsidiary to undertake the home loan business and also raise around Rs 400 crore to fuel expansion. The bank plans to raise the funds either through a qualified institutional placement (QIP) or an ADR/GDR, either at one go or in tranches. “We plan to enter the housing finance business and also raise around Rs 400 crore for which we have obtained enabling resolutions from our Board,” the bank’s Managing Director & CEO, Mr K S R Anjaneyulu, told PTI here. With the bank growing rapidly, it would be needed funds to fuel expansion as also its branch network, he said. “Looking at the significant expansion in branch network as well as strong growth in business, LVB will require more capital to grow. That is why after having raised funds through a rights issue in December 2009, we plan to raise further capital in the cu rrent fiscal,” Mr Anjaneyulu said. The lender has already applied for 35 branch licences for which it is awaiting RBI approval, he said. At present, the old generation bank has a branch network of 274 pan—India and over 178 ATMs. – PTI Source : http://www.thehindubusinessline.com/businessline/blnus/17301875.htm Filed under: Home loans Tagged: Home loans , Lakshmi Vilas

Tagged as: bank, home-loans, housing, housing-finance

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