[ecis2016.org] Home loans are set to turn cheaper, with state-run Bank of Baroda lowering its rate to as low as 8.35%, while some other lenders including Allahabad Bank and Bank of Maharashtra, also cut their rates for housing and other loans
The state-run Bank of Baroda (BoB) reduced its home loan rates by 70 basis points to 8.35% – the lowest across the industry and will be applicable for customers having a strong CIBIL score. At 8.35%, the rate is lower than industry leader State Bank of India’s 8.50% offer. “The home loan rate is linked to their CIBIL scores. A customer with a CIBIL score of 760 and above will be offered the lowest rate of 8.35%,” a bank official said. On a home loan of Rs 50 lakhs, the 70 bps reduction will translate into a saving Rs 2,496 a month and around Rs 9 lakhs for a 30-year loan.
You are reading: Home loans turn cheaper, as Bank of Baroda and others cut rates
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BoB said its existing customers, whose loans are linked to the base rate, can also switch to the new marginal cost of funds-based lending rate (MCLR) regime, without any additional charges. However, several other lenders are charging a switchover fee, which is a minimum of Rs 10,000 or 0.5% of the outstanding loan amount in case of SBI.
[ecis2016.org] Banks cut base rates; home loans to be cheaper
BoB reduced its MCLR by 55-75 basis points across all tenors. The new rates would be applicable to all loans sanctioned with effect from January 7, 2017. The bank’s one-year MCLR, to which all home loans are linked to is also at 8.35%. The official said the highest home loan rate would be at 9.35%. He said the new rate will be floating and will change with the next review in the MCLR after one year. BoB’s current base rate is 9.60%. Home loan borrowers of other banks or housing finance companies can also shift to BoB’s reduced rate of interest but the bank is yet to decide on the loan switching fee, he said.
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Bank of Maharashtra too, cut its benchmark MCLR by 30 bps, effective January 7, 2017. Its one-year MCLR is set at 8.95%. Allahabad Bank reduced its MCLR by 0.85% to 8.60% for a 1-year tenor. With the reduction in this benchmark rate, home, car, and other loans linked to the MCLR would become cheaper. Smaller private sector player, Sundaram BNP Paribas Home Finance, also announced a reduction in its rate for new housing loans with effect from January 10, 2017. Its rate of interest for new housing loans would become 8.70%, down from the existing 9.20%. “The company hopes that this move will help in reviving the sluggish real estate market,” Sundaram BNP Paribas Home Finance’s managing director, Srinivas Acharya said.
SBI and some other lenders, including private sector major HDFC Ltd, have already reduced their rates. Some experts have attributed the reduction in interest rates, to a surge in deposits with the banks post demonentisation. Banks have switched to MCLR as their new benchmark lending rate from June 2016, replacing the base rate system for new borrowers. Some banks charge a premium over the MCLR, to offer a loan. MCLR rates are revised every month.
Source: https://ecis2016.org/.
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Source: https://ecis2016.org
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