HDFC has taken SBI head on by announcing Home loan with a dual-rate loan under which a borrower will be charged a fixed rate up to March 2012 and a floating rate thereafter.

Thus to put the loan in correct perspective; for a 20-year loan of Rs 30 lakh, a borrower will pay a fixed rate of 8.25% up to March 2012 and then a floating rate that’s 500 basis points below the prime lending rate.

Thus we see that scheme is almost similar to SBI where, a borrower pays a fixed rate of 8% for the first year and 8.5% for the second and third years.

From the beginning of fourth year, the borrower can opt between a fixed and a floating rate. SBI’s floating rate is 275 basis points less than its benchmark rate, which is 11.75%, according to information on its website. (PLR) — the institution’s benchmark rate. Currently, the PLR is 13.75%.
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