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As per media sources, banks are exploring semi-fixed/hybrid home loans to deploy surplus liquidity

ICICIdirect Research 04 Sep 2026 DISCLAIMER

News: As per media sources, banks are exploring semi-fixed/hybrid home loans to deploy surplus liquidity while locking in lending spreads, following the record mobilisation under RBI’s forex swap facility, which attracted $136.4 billion, including $127.2 billion through FCNR(B) deposits. HSBC is offering home loans with a 3-year fixed rate starting at 7.50% and 5-year fixed rate at 8.25%, after which loans transition to prevailing floating rates. Kotak Mahindra Bank is offering hybrid home loans at a fixed 7.60% for up to 65 months, before transitioning to prevailing rates. The products provide banks an alternative to deploying excess liquidity into government securities, which carry mark-to-market risk when yields rise.

View: Semi-fixed home loans could enable banks to productively deploy surplus liquidity into relatively low-risk retail assets while locking in spreads for the initial tenure, providing some protection to margins amid interest-rate uncertainty. For borrowers, fixed initial pricing also provides EMI visibility, which could aid credit demand in retail segment.

Impact: Positive

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