The country's second largest foreign lender HSBC India today launched a fixed rate product

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for home loans and loans against property.

The scheme offers two options, one where the customer can make pre-payments subject to certain conditions and second wherein the customer chooses not to make pre-payments during the fixed rate period.

The new rate is available for one to five years for home loans and five years for loan against property, with applicable rate beginning at 11.25 per cent for one-year tenor to 11.75 per cent for a five-year home loan, the bank said in a statement.

There is 25 basis points discount for every tenor provided the borrower does not choose to pre-pay the loan, the statement added.

Similarly, loan against property, which has a five-year tenor, the rate is 12.5 per cent and 12.75 per cent with the pre-paid option.

On the expiry of the fixed rate period, the loan will switch to floating rate at a margin of 2 percent (for home loans) and 3.25 percent (for loans against property) over the prevailing base rate.

"The second option has been specially introduced for customers who are aware that they are not likely to prepay the loan within the term of the fixed rate. In this case, they can avail of a 0.25 percentage points discount from the bank (on the fixed rate), thereby having the benefit of hedging their interest rate risks over the fixed rate tenure," the private lender said.

HSBC India Head Consumer Assets Manish Sinha said in the statement, "The fixed rate product is a distinctive addition to our varied range of product offerings. We have extended this product to loans against property as well. There are many customers who do not prepay their loans within the first 5 years, and seeing this trend, we have introduced this product wherein they will be able to hedge against interest rate risk on loan payments. These unique features strongly reinforce our understanding of customer benefit."

The lender offers banking and financial services to over 1.5 million customers through its 50 branches and 150 ATMs across 29 cities.