SBI vs HDFC vs ICICI vs Axis Bank: Where to get cheapest home loan? Rates compared

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Updated: May 09, 2020 3:40 PM

The marginal cost lending rate cut by banks and finance companies is good news for home loan and car loan borrowers whose loans are linked to MCLR. With the rate cut, all loans including home loans, auto loans, personal loans, etc., tied to the MCLR will become cheaper.

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Just a few days back, the State Bank of India (SBI) reduced its one-year Marginal Cost of Funds based Lending Rate (MCLR) by 15 basis points (bps) from 7.40 per cent to 7.25 per cent per annum across all tenors, with effect from May 10. Following suit, PNB Housing Finance has also announced a reduction in its lending rates by 15 bps for home loans and loan against property with effect from May 9. Union Bank of India has also reduced its MCLR in the range of 5-15 bps across all tenors, with effect from May 11, 2020.

The PNB Housing Finance Company said the reduction in rate will be extended to all its existing retail customers who have availed the loan before February 2020 on floating rates. These reductions were brought in to provide support and relief to borrowers in the wake of the Covid-19 lockdown.

Experts say the marginal cost lending rate cut by banks and finance companies is good news for home loan and car loan borrowers whose loans are linked to MCLR. With the rate cut, all loans including home loans, auto loans, personal loans, etc., tied to the MCLR will become cheaper.

Cheaper home loan rates compared

With the rate cuts by banks and housing finance companies, home loans, car loans, loans against property, etc. will become cheaper, but by how much will it differ when compared to other banks? For instance, the one-year MCLR of SBI stands at 7.25 per cent per annum across all tenors, whereas for ICICI and Axis Bank, it stands at 8 per cent and 7.9 per cent, respectively, and 8.10 per cent for Kotak Bank. With the reduction in the lending rate of Union Bank by 15 bps, the overnight MCLR has been reduced to 7.15 per cent, whereas the 1-month MCLR has been reduced to 7.25 per cent. Additionally, the 3-month MCLRs have been reduced to 7.40 per cent, down by 5 bps, and the 6-month MCLR has also been reduced by 5 bps to 7.55 per cent. The 1-year MCLR of Union Bank after the rate reduction by 15 bps now stands at 7.60 per cent, from 7.75 per cent.

To opt for a home loan of up to Rs 30 lakh for salaried, the rate of interest offered by SBI is 7.40 per cent effective rate (ER), HDFC offers it at 7.85 per cent, ICICI Bank offers it at 7.70 per cent, whereas Axis Bank offers its home loan at 8.10 per cent per annum. PNB Housing Finance offers its home loan at 8.95 per cent to 9.45 per cent to salaried individuals. Union Bank of India offers home loans at 7.35 to 7.50 per cent interest rate to salaried individuals.

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