Banks and housing finance companies that offer the cheapest home loans Despite RBI's repo rate hike in June, several banks such as Indian Overseas Bank (IOB), Bank of Baroda (BOB) and State Bank of India (SBI) continue to offer sub-8 percent interest rates on home loans
August 02, 2022 / 10:35 AM IST
Home loan interest rates have seen a dramatic rise after the Reserve Bank of India (RBI) effected two rounds of repo rate hikes in May and June. As a result of the cumulative 90 basis-point hike, the repo rate has risen to 4.9 percent. All retail floating-rate home loans sanctioned after October 1, 2019 are linked to an external benchmark, which in case of most banks is the repo rate. As a result, home loans have turned costlier and interest burden has increased for home loan borrowers. Moreover, these rates could rise further if RBI hikes repo rate again on August 5. At present, several banks and housing finance companies offer interest rates under 8 percent on Rs 75-lakh home loans with tenure of 20 years, as per data from Bankbazaar.com.
At 7.15 percent, Indian Overseas Bank offers the lowest interest rates on home loans of Rs 75 lakh with tenure of 20 years at present, according to Bankbazaar data.
Interest rate of 7.2 percent is what Central Bank of India and Bajaj Finserv charge for such home loans. The EMI in this case will work out to Rs 59,051.
Bank of Maharashtra and Bank of India levy interest rate of 7.3 percent per annum. Borrowers' monthly installment will amount to Rs 59,506
A clutch of banks - Punjab National Bank, Punjab and Sind Bank, UCO Bank, Indian Bank and Union Bank of India offer an interest rate of 7.4 percent. The EMI on a Rs 75-lakh home loan with a tenure of 20 years will work out to Rs 59,962.
At 7.45 percent, Bank of Baroda (BoB) offers a slightly higher interest rate on such home loans. In this case, borrowers have to pay an EMI of Rs 60,190.
LIC Housing Finance is quoting an interest rate of 7.5 percent on a Rs 75-lakh home loan with 20-year tenure. Likewise, IDBI Bank and Kotak Mahindra Bank charge the same interest rate. The EMI will work out to Rs 60,419
India's largest bank- SBI - offers an interest rate of 7.55 percent. Canara Bank, too, charges the same rate to its home loan customers seeking a loan of Rs 75 lakh with a tenure of 20 years. The EMI will amount to Rs 60,649
A note on the Bankbazaar data: Interest rates on home loans for all listed (BSE) public and private sector banks as also housing finance companies as listed on National Housing Bank’s (NHB) website, which offer home loans of 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 has been collected from respective bank/HFC’s website as on July 28, 2022. Banks and HFCs, in their respective sections, are listed in ascending order on the basis of interest rate i.e. the institution offering the lowest interest rate on home loan (Rs 75 lakh) is placed at the top and highest at the bottom. The lowest rate offered by the bank/HFC on loan of Rs 75 lakh has been considered in the table. EMI is calculated on the basis of interest rate mentioned in the table for a Rs 75-lakh loan with a tenure of 20 years. Processing and other charges have been assumed to be zero for the purpose of EMI calculation.
Preeti Kulkarni is a financial journalist with over 13 years of experience. Based in Mumbai, she covers the personal finance beat for Moneycontrol. She focusses primarily on insurance, banking, taxation and financial planning