Govt frowns at teaser home loans

Teaser home loan rates,which entice borrowers with a low fixed rate initially and then move to a floating rate,are a matter regulatory concern and may impact financial stability of the lenders,Parliament was informed today.

“…Borrowers with low financial means may get attracted to take such loans on finding the initial low interest rates to be within their financial means,but may land themselves into a financial distress should interest rates start rising and the banks start charging them with higher interest rates post the lapse of the initial period,” Minister of state for Finance Namo Narain Meena told the Lok Sabha in a written reply.

The resulting delinquency of such loans would have adverse impact on the financial stability of the lending banks,he said.

“Offer of such interest rates are a matter of regulatory concern…,” Meena said.