Interest rate: riders keep homebuyers guessing

14 Mar, 2009

The limited period interest sweetener announced by SBI has turned home loan market competitive, but it also raises issues. The reduced interest rate from SBI is for loans for all sizes given for a limited period up to April 30. This lower interest rate, however, will be applicable for a period of one year from the date of disbursement.
This interest rate will be reset after one year as per contracted rate at the time of sanction of loan. This will mean that the EMI (equated monthly instalment) of a home loan taker will increase from the second year as loans below Rs.20 lakh are reset at a higher four-year fixed interest rate and loans above that sum reset at the then prevailing floating interest rate.