The special housing loan schemes launched recently by State Bank of India at 8 per cent interest rate have triggered migration of customers of some private banks to SBI.While the exact number of migrated customers/loan applications could not be ascertained, the foreclosures of housing loans at leading  private banks for loan swapping have gone up noticeably, according to sources.

"We actually expected to drive good demand for new home loans from prospective buyers but are pleasantly surprised with increasing  response on the loan swapping front," a senior SBI official from Mumbai told Business Line. However, the new loan applications still remain "dull" in some major  urban locations due to expectations of further dip in the real estate prices and interest rates, he added.Sources in some private banks, including ICICI Bank, confirmed the "noticeable"  foreclosures in home loans. "There is also significant  increase in the number of enquiries on foreclosure penalty and request for list of documents necessary for applying for a loan with another bank for swapping," said a source in ICICI Bank.Existing customers are also hoping for some benefit in view of the reduction in interest rates by SBI and other banks. "When I asked whether any renegotiation of interest rate on my home loan is possible, I was told by the bank staff that I can close the loan to go to another bank," said Mr S. Reddy, a senior IT professional who had taken Rs 20 lakh housing loan from ICICI Bank here. However, the official spokesperson of ICICI Bank in Mumbai said: "There has not been any increase in number of foreclosures of home loans."

A HDFC Bank official said while new customers were weighing their options, the existing customers are enquiring about the penalty and foreclosure of loans. The penalty for pre-closure of loans after payment of EMIs for three years now ranges between 2.25 per cent and 3 per cent of the outstanding in different banks. The benefit for a customer who swaps his loans from a higher rate to a  loan at 8 per cent interest for one year is varied. "This is a calculation which needs to be worked out at the individual level depending on the loan amount outstanding, rate of interest and its nature (flat/floating) and the foreclosure penalty one has to pay," said Mr Dattatreya Sarma, Deputy General Manager, State Bank of Hyderabad (which is also offering home loans at 8 per cent).