If you’re planning to take a home loan of less than Rs 30 lakh, here’s a list of 15 leading government and private banks that are offering the lowest interest rates right now.
The Reserve Bank of India’s decision to keep the repo rate unchanged at a low of 4% for more than a year now has contributed towards many banks reducing their fixed deposit interest rates demoralising investors. However, this low-repo trend has also led many banks to reduce their floating home loan interest rates to multi-decade lows, especially since October 2019 when the central bank directed all the banks to externally benchmark their loans.
In fact, currently there are at least 15 banks that are offering home loans starting at under 7% p.a. — compare this to September 2019 when the lowest home loan rates were around 8.40% p.a. So, if you’ve been planning to buy a home, have the necessary margin funds, a credit score over 750, and adequate repayment capacity, this indeed could be a great time to realise your home-buying dreams, according to BankBazaar.
The current phase of low home loan interest rates, especially by banks who have benchmarked their loans to the RBI’s repo rate, also provides an opportunity for borrowers servicing home loans under the MCLR or base lending rate regimes (i.e. for loans taken before October 2019) to refinance their loans to repo-linked loans to enjoy the lower rates and save on the interest outgo.
Borrowers can reach out to their banks to convert their loans to the new regime or refinance their loan with another lender after carefully evaluating the refinancing costs and potential savings on interest dues.
Do note, however, the repo-linked loans will see a quick and proportional increase whenever the central bank decides to hike the repo rate. These loans also involve a customer risk spread over and above the repo rate and the bank’s spread that could get triggered if the borrower’s credit score sees a substantial drop during the loan tenure, leading to a higher applicable interest rate and EMI amount, as per BankBazaar.
So, if you’re planning to take a home loan of less than Rs 30 lakh, here’s a list of 15 leading government and private banks that are offering the lowest interest rates right now. Do note, the interest rate applicable to you would be determined depending on your age, income, gender, credit score, loan amount, loan to value ratio, or any other terms and conditions of your chosen lender.
15 Top Banks Currently Offering the Lowest Interest Rates on Home Loans under Rs 30 Lakh
Disclaimer: Interest rates that vary with tenures or credit scores within the specified loan amount are indicated as a range, and banks have been listed in ascending order according to their current home loan rates for loans under Rs 30 lakh. Data taken from the respective bank websites on July 2, 2021.
Data compiled by BankBazaar.com, an online marketplace for loans, credit cards and more.