Mumbai, Dec. 8: Home loan borrowers now have a problem of plenty — ICICI Bank and Kotak Mahindra Bank today joined the State Bank of India (SBI) and HDFC Ltd to offer cheap loans.

Irrespective of the loan amount, ICICI Bank would offer new loans at a fixed rate of 8.25 per cent for the first two years.

Kotak, on the other hand, will offer floating rates starting from 7.99 per cent per annum, depending upon the loan amount, to salaried customers.

It also launched a special scheme under which the bank will offer loans at a fixed rate of 8.49 per cent for 30 months from the date of disbursement of the money. Subsequently, the applicable floating rate for the balance term will apply.

The limited period offer will continue till January 31, 2010. The 8.49 per cent rate is applicable to all new loans irrespective of the amount.

The ICICI offer would be applicable to loans sanctioned between December 1 this year and January 31, 2010, and the first disbursement should be made before March 31 2010.

From the third year onwards, the bank would charge the floating interest rate depending upon the prevailing reference rate.

HDFC Ltd, the country’s largest housing finance company, launched a special home loan product last week that would carry a fixed interest rate of 8.25 per cent up to March 31, 2012. This was in competition to state-run State Bank of India’s cheap home loan offer.

Early this year, the SBI set the ball rolling by announcing a scheme offering an 8 per cent interest rate. The scheme, earlier scheduled to end last month, was extended till March 2010, following a huge demand.

The bank, which offers the special scheme under My Home Campaign, offers an 8 per cent fixed interest rate for 5 years for loans up to Rs 5 lakh, with a maximum tenure of 10 years.

For loans above Rs 5 lakh and up to Rs 50 lakh, the interest rate has been fixed at 8 per cent during the first year and 8.5 per cent during the second and third years.

The bank is also offering SBI MaxGain, under which it offers home-loans as an overdraft.

The hugely advertised 8 per cent scheme from the banking major had generated substantial interest from aspiring home-buyers across the country.