Cheaper home loans have helped people to buy their dream homes. The lower interest rates on home loans offered by banks have also helped boost real estate sales. The Reserve Bank of India (RBI) has lowered its repo rate by 115 basis points (bps) since March 2020. Banks too have passed the benefits, with the highest pass-through offered to fresh loans. On Monday, the State Bank of India reduced its interest rate on home loans. Taking a cue from the country’s top lender, Kotak Mahindra Bank also announced a reduction in its home loan interest rates. On Wednesday, Housing Development Finance Corporation (HDFC) reduced home loans interest rates. Home loan rates were already at a 15-year-low, as banks compete in a market with low credit demand.
Housing Development Finance Corporation: HDFC has reduced home loans interest rates by 5 basis points to 6.75%. The changes will be effective from today (4 March), the company had said in a regulatory filing. “HDFC reduces its Retail Prime Lending Rate (RPLR) on Housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 5 basis points, with effect from March 4, 2021,” the lender said. The change will benefit all existing HDFC retail home loan customers, it mentioned.
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Kotak Mahindra Bank: Kotak Bank also cut 10 basis points (bps) in its home loan rates for a limited period, claiming its offering to be the lowest in the market. Customers will be able to avail of home loans for 6.65% till 31 March as part of a special offer after the rate reduction, the bank said in a statement. The 6.65% rate is applicable to both home loans and balance transfer loans across amounts.
State Bank of India: SBI offers home loan interest rates starting from 6.70% per annum. This is a limited period offer ending on 31 March. The lender is also giving a 100% waiver on processing fees. The interest concession is based on the loan amount and CIBIL score of the borrower. SBI provides a host of various home loans for the customers.
Who stands to benefit from the low rates?
The rates have been cut for new borrowers and are not applicable to existing borrowers. Existing borrowers can only benefit in case RBI cuts the repo rate Repo rate-linked home loan is calculated on the repo rate, plus the spread or margin of the bank.