HDFC revives teaser home loan scheme

HDFC has introduced a new dual home loan product, under which, home loans will be available at 8.25% for the first year and 9% for the second year.

Under the new scheme, the home loan will have a fixed rate of 8.25% and 9% for the first and second year and a floating rate from the third year onwards.

For loans under Rs 30 lakh, the bank will levy a rate of 475 bps below the prime lending rate (PLR) from the third year. This works out to 9% as HDFC's PLR is 13.75%. The third year rate has been reduced by 25 bps.

In the case of loans above Rs 30 lakh, the bank will levy a rate of 450 bps below PLR from the third year. This works out to 9.25%.

The new offer is applicable till April 30 but the first disbursal can be made by June 30. The offer is applicable to all new home loan customers. HDFC says the cost of funds permits it to offer a lower initial fixed rate.

If one compares HDFC's new scheme with that of State Bank of India, SBI home loan rate scheme is fixed at 8% for the first year, 9% for the second and third year, and is floating thereafter. SBI's PLR is 11.75%. The new scheme offers a floating rate of State Bank advance rate (SBAR) minus 175 bps. Hence, the effective rate is higher than HDFC's scheme.

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