Many banks have reduced their fixed deposit interest rates as a result of the Reserve Bank of India’s decision to hold the repo rate at a low of 4% for more than a year, demoralizing investors. However, since the central bank required all banks to externally benchmark their loans in October 2019, this low-repo trend has prompted several banks to cut their floating home loan interest rates to multi-decade lows.
At least 15 banks are presently offering house loans with interest rates starting at less than 7% p.a. — compare this to September 2019, when the lowest home loan rates were approximately 8.40 percent p.a. So, if you’ve been intending to purchase a home and have the requisite down payment funds, a credit score of at least 750, and enough repayment ability, now may be a perfect time to do so, according to Big Bazaar.
The current low home loan interest rates, especially among banks that have benchmarked their loans to the RBI’s repo rate, provide 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 and save on interest.
Borrowers can contact their banks to get their loans converted to the new regime or refinance their loans with another lender after carefully weighing the refinancing fees and possible interest savings.
When the central bank decides to raise the repo rate, however, repo-linked loans will experience a rapid and proportional increase. According to BankBazaar, these loans additionally include a customer risk spread over and above the repo rate and the bank’s spread, which may be triggered if the borrower’s credit score drops significantly during the loan term, resulting in a higher applicable interest rate and EMI amount.
If you’re looking for a house loan for less than Rs 30 lakh, here’s a list of 15 top government and private institutions that are now giving the lowest interest rates. Keep in mind that the interest rate will be decided by age, income, gender, credit score, loan amount, loan to value ratio, and any other terms and circumstances set out by the selected lender.
Banks providing Lowest Home Loan Interest Rates Under Rs 30 Lakh
- Kotak Mahindra Bank [Private Bank] at an interest rate between 6.65 – 7.30 P.A%
- Punjab & Sind Bank [Government Bank] at an interest rate between 6.65 – 7.35 P.A%
- State Bank of India [Government Bank] at an interest rate between 6.70 – 7.15 P.A%
- ICICI Bank [Private Bank] at an interest rate between 6.75 – 7.30 P.A%
- HDFC Bank [Private Bank] at an interest rate between 6.75 – 7.50 P.A%
- Bank of Baroda [Government Bank] at an interest rate between 6.75 – 8.35 P.A%
- Union Bank of India [Government Bank] at an interest rate between 6.80 – 7.35 P.A%
- Punjab National Bank [Government Bank] at an interest rate between 6.80 – 7.60 P.A%
- Central Bank of India [Government Bank] at an interest rate between 6.85 – 7.30 P.A%
- Bank of India [Government Bank] at an interest rate between 6.85 – 8.35 P.A%
- IDBI Bank [Private Bank] at an interest rate between 6.85 – 10.05 P.A%
- UCO Bank [Government Bank] at an interest rate between 6.90 – 7.25 P.A%
- Bank of Maharashtra [Government Bank] at an interest rate between 6.90 – 8.40 P.A%
- Axis Bank [Private Bank] at an interest rate between 6.90 – 8.55 P.A%
- Canara Bank [Government Bank] at an interest rate between 6.90 – 8.90 P.A%
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