The recent Covid-19 pandemic has forced the Reserve Bank of India to lower the repurchase interest rate in recent times, which has caused the bank to provide a record low in the home loan interest rate. The Reserve Bank of India has instructed banks in its circular to link its retail lending rates to any of the following external benchmarks:
- Repo rate of Reserve Bank of India.
- Financial Benchmarks India Pvt. Limited company (FBIL) revealed a 3-month Treasury bill yield.
- FBIL releases the Indian government’s 6-month Treasury bill yield.
- FBIL issued any other benchmark market interest rates.
Most banks choose the Reserve Bank of India’s repo rate as the choice of external benchmark. The home loan interest rate linked to the repo rate is known as the “repo rate-linked loan interest rate” (RLLR). RLLR consists of the Reserve Bank of India’s repurchase interest rate plus the spread or margin.
The home loan interest rate has tumbled to 6.7%. PSU banks, including the State Bank of India, presently charge 6.7-7% interest rates on new home loans. The individuals who have gotten repo-linked home loans from these banks have started to decrease home loan interest rates from July. But those who obtain home loans and MCLR-linked loans from other banks still have to pay higher home loan interest rates.
Currently, the home loan interest rate depends on the MCLR interest rate, the benchmark interest rate, and the bank spread in India. Therefore, the actual interest rate of the home loan varies according to the bank’s benchmark interest rate. Home loan interest rates additionally shift and rely upon the capabilities of the borrower. For example, their repayment ability, savings history, assets, liabilities, income, spouse’s income, age, number of dependents, qualifications, stability, and professional continuity also determine eligibility factors and tax rates.
The deposit charged by the bank will remain unchanged for all home loan recipients, but, according to the notice of the Reserve Bank of India, the bank is allowed to charge the borrower a risk premium. The risk premium charged by the bank will rely upon your bank’s level of risk to you, so the circumstance will change, starting with one borrower then onto the next.
Home Loan Interest Rate offered by various Banks:
- Union Bank of India: 0.50% of the loan amount, up to 15,000 rupees
- Indian banks : 0.25% of the loan; minimum 1,500 rupees, maximum 20,000 rupees
- The Central Bank of India: 0.50% handling fee with a maximum limit of 20,000 rupees
- The Bank of Canada: A handling fee of 0.50%; the minimum is 1,500 rupees, and the maximum is 10,000 rupees
- ICICI Bank : 0.50% to 2% handling fee (minimum 1,500 rupees)
- Punjab and Sindh banks are completely free of handling fees and inspection fees.
- State Bank of India: 0.40% handling fee plus GST. The minimum is 10,000 rupees, and the maximum is 30,000 rupees.
- Baroda Bank : 0.25% to 0.50% of the loan; minimum Rs.8500/-maximum 25000 rupees/-
- IDFC First Bank: A handling fee of up to 10,000 rupees (additional premiums are charged based on risk conditions)
- Indian Banks: 0.230% of monthly loan fee.
- Maharashtra Bank: Maximum fee of 0.25% Rs 25,000
- Indian Overseas Bank: 0.50% handling fee; up to 25,000 rupees
- IDBI Bank: minimum of 2500 rupees and a maximum of 15000 rupees
- PNB: 0.35% processing fee; the minimum is 2,500 rupees, the maximum is 15,000 rupees, plus a document fee of 1,350 /-
- J&K Bank: 0.25%, plus a minimum GST fee of Rs 5,000; a maximum of Rs 25,000 (NIL PC is used for acquisition loans)
- Karur Vysya: minimum of 2500 rupees and a maximum of 7500 rupees, plus GST as a handling fee
- Dhanlaxmi Bank: 1.25% of the loan amount
- Federal Bank: 0.50% of the loan amount as a handling fee; the minimum is Rs 10,000, and the maximum is Rs 45,000
- South India Bank: 0.40% of the loan amount
- DCB Bank: Maximum of 2% of the loan amount; a minimum of Rs 5,000
- The Karnataka Bank: A minimum of 500 rupees and a 1% fee.
- Lakshmi Vilas Bank : 0.25% to 0.40% of the loan; up to 20,000 rupees/-
- Yes bank : 2% or Rs 10,000 .
- UCO Bank:0.5% of the loan amount, minimum of 1500 rupees and a maximum of 15,000 rupees.