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Cheapest home loans: Banks and HFCs that win the race this festive season

Despite RBI’s 50-bps rate increase, ten banks and housing finance companies continue to offer interest rates of up to 8.1 percent on floating-rate home loans, considered to be cheapest in the market.

October 05, 2022 / 09:48 AM IST
Prospective home-buyers and borrowers used to sweetened home loan deals every year during the peak festive season have had to face steep interest rate hikes this time round. The Reserve Bank of India’s (RBI) 50 basis-point hike on September 30 may have restored pre-COVID-19 interest rate levels, but borrowers can still obtain home loans at less than 8.05 percent from several banks. In fact, some banks offer interest rates of less than 8 percent as on October 4, 2022, as per data from Bankbazaar.com, though some may reset the rates later to reflect the banking regulator’s rate hike. All floating-rate home loans sanctioned after October 1, 2019 are linked to an external benchmark, which is repo rate in most cases. So, policy rate revisions will be fully passed on to borrowers.
The Reserve Bank of India’s (RBI) repo rate hikes since May 2022, including the 50 basis-point increase on September 30, may have restored pre-COVID-19 interest rate levels, but borrowers can still obtain home loans at less than 8.05 percent from several banks. In fact, some banks offer interest rates of less than 8 percent as on October 4, 2022, as per data from Bankbazaar.com, though some may reset the rates later to reflect the banking regulator’s rate hike. All floating-rate home loans sanctioned after October 1, 2019 are linked to an external benchmark, which is repo rate in most cases. So, policy rate revisions will be fully be passed on to borrowers.
This public sector bank offers an interest rate of 7.5 percent on a Rs 75-lakh home loan with a repayment tenure of 20 years. The equated monthly instalment (EMI) will amount to Rs 60,419.
The Central Bank of India offers an interest rate of 7.5 percent on a Rs 75-lakh home loan with a repayment tenure of 20 years. The equated monthly instalment (EMI) will amount to Rs 60,419.
At 7.7 percent, the non-banking financial company (NBFC) charges 20 bps more for such home loans. The EMI will work out to Rs 61,340. Unlike banks, housing finance companies’ home loans are not linked to an external benchmark, but competition in the market ensures comparable, and in some cases cheaper, rates.
At 7.7 percent, the non-banking financial company (NBFC) charges 20 bps more for such home loans. The EMI will work out to Rs 61,340. Unlike banks, housing finance companies’ home loans are not linked to an external benchmark, but competition in the market ensures comparable, and in some cases cheaper, rates.
The interest rate is 7.75 percent for home loans offered by this government-owned banking major. You will have to pay an EMI of Rs 61,571 every month.
The interest rate is 7.75 percent for home loans offered by this government-owned banking major. You will have to pay an EMI of Rs 61,571 every month.
At 7.99 percent, this private sector bank is the last of lenders who offer sub-8 percent rates even in a rising interest rate scenario. The EMI works out to Rs 62,686.
At 7.99 percent, this private sector bank is the last of lenders who offer sub-8 percent rates in this list, even in a rising interest rate scenario. The EMI works out to Rs 62,686.
Another government-owned bank, IDBI Bank, too, offers an interest rate of 8 percent on a home loan of Rs 75 lakh with a 20-year repayment period.
Another government-owned bank, IDBI Bank offers an interest rate of 8 percent on a home loan of Rs 75 lakh with a 20-year repayment period. Indian Overseas Bank, too, offers a similar rate.
This public sector housing finance giant, too, charges an interest of 8 percent on such home loans. The EMI in this case will be Rs 62,733.
This public sector housing finance giant, too, charges an interest of 8 percent on such home loans. The EMI in this case will be Rs 62,733.
At 8 percent, this Aditya Birla Housing Finance's offering is at par with those of bigger banking and housing finance majors.
At 8 percent, Aditya Birla Housing Finance's offering is at par with those of bigger banking and housing finance majors.
At 8.05 percent, the interest rate is slightly higher in case of this government-run bank. The EMI amounts to Rs 62,967.
At 8.05 percent, the interest rate is relatively higher in case of this government-run bank. The EMI amounts to Rs 62,967.
This private sector bank’s interest rate for a Rs 75-lakh home loan with a 20-year tenure is also 8.05 percent
This private sector bank’s interest rate for a Rs 75-lakh home loan with a 20-year tenure is also 8.05 percent.
At 8.1 percent, its offering may not be the cheapest home loan available in the market today, but it is among the few private sector lenders who have made it the cheapest lenders' list
At 8.1 percent, its offering may not be the cheapest home loan available in the market today, but it is among the few private sector lenders who have made it the cheapest lenders' list. NBFCs such as Tata Capital, Repco Home Finance and GIC Housing Finance also offer similar rates to borrowers.
Interest rates on home loans for all listed (BSE) public and private sector banks, and housing finance companies as listed on National Housing Bank’s website, that offers home loans of up to Rs 75 lakh have been considered for the 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 October 4, 2022. Banks and HFCs are listed in ascending order on the basis of interest rates – that is, bank/HFC offering lowest interest rate on home loan (loan amount of Rs 75 lakh) is placed at top and highest at the bottom. Lowest rates offered by the bank/HFC on loan of Rs 75 lakh have been considered in the table. EMI is calculated on the basis of interest rate mentioned in the table for a Rs 75-lakh home loan with repayment tenure of 20 years (processing and other charges have been assumed to be zero for EMI calculation).
Interest rates on home loans for all listed (BSE) public and private sector banks, and housing finance companies as listed on National Housing Bank’s website, that offers home loans of up to Rs 75 lakh have been considered for the 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 October 4, 2022. Banks and HFCs are listed in ascending order on the basis of interest rates – that is, bank/HFC offering lowest interest rate on home loan (loan amount of Rs 75 lakh) is placed at top and highest at the bottom. Lowest rates offered by the bank/HFC on loan of Rs 75 lakh have been considered in the table. EMI is calculated on the basis of interest rate mentioned in the table for a Rs 75-lakh home loan with repayment tenure of 20 years (processing and other charges have been assumed to be zero for EMI calculation).
Moneycontrol PF Team
first published: Oct 5, 2022 09:06 am