Fixed Rates – Never in the interest of the customers:
Currently Fixed rates are not advised. The same is because of the following reasons.
Long Term Fixed Rates:
There are not long term fixed offers. Even if any Bank is giving 10 or 20 year fixed offer it is @ 10.75% - 11.25% which is impractical as you may never reach these rates. Hence it is better to enjoy the ups & downs movement of the rates than get stuck at higher rates for the full tenure.
Short term Fixed Rates:
These are being given at rates of 9.50% to 9.60% by some banks for 1 or 2 years. Please note that in the short term the rates are definitely moving only one way which is down. Hence there is no logic in tying up at 9.60% for 2 years when the rates may be 9.25% in 3 months & maybe 9.00% in the next 6-9 months.
Short term Fixed by NBFCs:
Some FI like LIC / India Bulls etc. offer fixed which might look very attractive @ 9.50% or slightly lesser. Please note that after 2 years you will move to floating rates. You will have to be very careful with them and double check on the modus operandi on their floating model when the rate moves to floating. The floating after 2 years is PLR (around 14.00%) minus discount (around 2.50%). This means that after 2 years you will move to 11.50% floating rate.