The monetary policy announcement some time back had come with some monetary tightening measures like hike in the cash reserve ratio (CRR) as well as in the repo and reverse repo rates. The RBI has taken these moves to control the towering inflation rates of the country.
The banks, however, have so far shielded the home loan borrowers from the clutches of the strict monetary tightening measures. The home loan rates have not yet been raised by banks owing to sufficient liquidity persisting in the system and low credit offtake.
In order to facilitate the home loan borrower, banks are offering teaser loan schemes which offer fixed interest rates at low levels for the initial years and then the loan shifts to a floating one. While all other banks have stopped this scheme, the country's largest lender, SBI continues with this scheme till June 2010.
This period seems to be a good option for home loan borrowers. They can benefit from a loan scheme by various methods like opting for a scheme which has a visible timeframe like three years of fixed interest rate etc.
Also the borrower can start repayment of his loan early. The teaser loans are in fact the best for those borrowers who wish to prepay their loans in the first 5-6 years.