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Home loans: Kotak Mahindra Bank, Punjab & Sind Bank offer the lowest rates

Interest rates start from 6.65 percent

July 14, 2021 / 03:27 PM IST

At least 16 banks and housing finance companies offer Rs 75-lakh home loans at interest rates that are under 7 percent, as per data from Bankbazaar.com. Amongst these lenders, private sector bank Kotak Mahindra and government-owned Punjab & Sind offer the cheapest home loans, with interest rates starting at 6.65 percent. Large lenders such as State Bank of India (SBI) and HDFC charge interest rates of 6.95 percent and 7 percent respectively for this home loan amount.

Apart from taking home loans to fund property purchase, those who are already repaying home loans can also take advantage of the prevailing soft rates by switching lenders to reduce their interest burden. This is particularly applicable to those who had taken home loans before October 1, 2019, when the repo-linked lending rate regime (RLLR) that made the policy rate transmission more effective, came into being.

As per a Bankbazaar research paper, in September 2019, the lowest home loan rates were in the region of 8.40 percent. Now, in July 2021, the lowest home loan rates on offer are in the 6.49-6.95 percent range. The dip in rates is due to the introduction of RLLR as well as the cumulative 115 basis point rate by the Reserve Bank of India (RBI) in March and May 2020. If the difference between your existing home loan rates and the ones being offered by other banks currently is 35-50 basis points, you should look to move to another lender. However, before that, negotiate with your current bank to check whether it can match the lower rate. If the bank agrees, you will save time and effort on fresh documentation.

A note on the table

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Interest rate on home loans for all listed (BSE) public and private banks, and HFCs as listed on NHB's website and which offer home loans up to Rs 75 lakh have been considered for data compilation. Banks/HFCs for which data is not available on their websites have not been considered. Data collected from respective bank/HFC's website as on July 1, 2021. Banks and HFCs in their respective sections are listed in ascending order on the basis of interest rate – that is, bank/HFC offering lowest interest rate on home loan is placed at top and highest at the bottom. Lowest rate offered by the bank or HFC on a loan of Rs 75 lakh has been taken into account. EMI is calculated on the basis of interest rate mentioned in the table for Rs 75-lakh loan with tenure of 20 years (processing and other charges are assumed to be zero for EMI calculation).
Moneycontrol PF Team
first published: Jul 14, 2021 03:27 pm

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