ICICI Bank and HDFC have discontinued the teaser rate scheme under which home loans at cheaper rates were given to new borrowers.
The scheme was to expire on November 30, 2010. Both the lenders have said that they would extend the scheme.
Teaser rate is a special loan scheme under which a concessional rate is offered for a limited period to attract customers.
Under the teaser rate scheme, ICICI Bank offered home loans at 8.5 per cent in the first year, 9.25 per cent in the second year and 1.5 per cent over and above the base rate in the third year.
HDFC offered home loans at a fixed rate of 8.5 per cent up to 31 March, 2011, 9.5 per cent for a period between 1 April, 2011 and 31 March, 2012 and the applicable floating rate for the balance term.
The Reserve Bank of India (RBI) had in its policy review meeting last month voiced concern over the high risk of default on loans offered at teaser rates and had tightened the noose around this product.
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