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How Things Stand for Home Loan Borrowers After Lenders Slashed Lending Rates in Response to 0.75% Repo Rate Cut?

Highlights

  • Home Loan Rates have Fallen to as Low as 7.15%
  • Does it present an opportunity to save on your existing loan, check this out to know

The Reserve Bank of India (RBI), after taking stock of the emergency caused due to the COVID-19 pandemic, decided to cut the repo rate by a massive 75 basis point (100 basis points=1%) to 4.40% on March 27, 2020. The action from the RBI is making banks and housing finance companies (HFCs) cut their lending rates. Although HFCs don’t price loans based on the external benchmark that their banking counterparts do, they have been able to keep their rates competitive, hence taking the rate cut war to a different level. With lenders busy cutting the rates, it’s time for borrowers like you to rejoice and save on your interest outgo. Exciting opportunities like a balance transfer awaits you in this rate cut race. So, we will first see the rates that have come down across lenders before figuring out the gains ahead of you.

SBI Home Loan Rates Now Start from 6.95%

State Bank of India (SBI), the country’s premier lender, has decided to slash the lending rate to as low as 6.95% per annum. And, the maximum rate is 8.00%. But how does the rate stand across the loan amounts? Check out the table for the same.

ProfessionLoan AmountInterest Rates for Women (p.a.)Interest Rates for Others (p.a.)
Salaried BorrowersUpto 30 lakhs6.95% - 7.05%7.00% - 7.10%
Above 30 to 75 lakhs7.20% - 7.30%7.25% - 7.35%
Above 75 lakhs7.30% - 7.40%7.35% - 7.45%
Non Salaried BorrowersUpto 30 lakhs7.10% - 7.20%7.15% - 7.25%
Above 30 to 75 lakhs7.35% - 7.45%7.40% - 7.45%
Above 75 lakhs7.45% - 7.55%7.50% - 7.60%

HDFC Home Loan Rates Have Fallen to as Low as 7.85%

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The country’s premier mortgage player HDFC Limited has also slashed interest rates to woo borrowers. With the latest rate cut, HDFC home loan rates have come down to as low as 7.85% per annum. Check out the table below to know the rates that apply to different loan amounts.

Loan Amount (In INR)Salaried & Self-employed ProfessionalsSelf-employed Non-professionals
Upto 30 Lakh7.85%-8.35%8.00%-8.50%
Above 30 Lakh-75 Lakh8.00%-8.50%8.15%-8.65%
Above 75 Lakh8.10%-8.60%8.25%-8.75%

ICICI Bank Home Loan Interest Rates Have Fallen to as Low as 8.10%

The private banking leader ICICI Bank has also cut the home loan rates. As a result, the lowest home loan rate at ICICI now stands at 8.10%, with the highest being 9.20%. You can check the rates across different loan amounts in the table below.

Loan Amount (In INR)SalariedSelf-employed
Upto 35 Lakh8.10%-8.75%8.35%-9.00%
Above 35 Lakh-75 Lakh8.25%-8.90%8.45%-9.10%
Above 75 Lakh8.45%-9.10%8.55%-9.20%

LIC Home Loan Can Now Available at as Low as 6.90%

LIC Housing Finance has also cut rates for home loan borrowers. The rates differ for salaried and other segments based on the loan amount they apply for and the CIBIL score they have.

Loan Quantum (In INR)CIBIL ScoreSalaried & ProfessionalsNon-Salaried & Non Professionals
Up to 50 Lakh>=7006.90%7.00%
650-6997.10%7.20%
600-6497.30%7.40%
<6007.50%7.60%
Above 50 lakh to 1 Crore>=7007.00%7.10%
650-6997.30%7.40%
600-6497.60%7.70%
<6007.70%7.80%
Above 2 Crore to 3 Crore>=7007.10%7.20%
650-6997.40%7.50%
600-6497.70%7.80%
<6007.70%7.80%
Above 3 Crore to 15 Crore>=7007.20%7.30%
650-6997.50%7.60%
600-6497.70%7.80%
<6007.80%7.90%
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How Much Has Bank of Baroda Home Loan Interest Rate Fallen Post the Repo Rate Cut?

Bank of Baroda, one of the largest public sector banks, has reduced the rates in line with the repo rate reduction. As a result, the lowest rate here is 7.25% per annum, which happens to be the benchmark rate of the bank. The benchmark rate is denoted by BRLLR. The table below shows the rates across different credit scores (CIBIL).

CIBIL ScoreInterest rate
775 and above7.00%
726 and above but less than 7757.35%
701 and above but less than 7267.60%
650 and Above but less than 7018.35%
Less Than 6508.35%
(-1)7.60%

Note – Bank staff members can get the loan at the lowest rate of 7.25% per annum.

PNB Home Loan Interest Rates Fall to as Low as 7.20%

Punjab National Bank, another public lender, has eased the home loan rates across loan amounts and based on the credit score. As a result, the lowest rate here stands at 7.20%.

Loan Amount (In INR)PNB Pride (Irrespective of Credit Score)Credit Score of 750 and AboveCredit Score of 700 and Upto 749Credit Score of Less Than 700
Upto 30 Lakh7.20%7.20%7.35%7.45%
Above 30 Lakh-75 Lakh7.45%7.35%7.60%7.70%
Above 75 Lakh7.45%7.35%7.70%7.80%

Does the Rate Cut Present an Opportunity of Balance Transfer?

You could see the rates have fallen to 7.15% to below 9% per annum following the RBI’s repo rate cut. If you are servicing the home loan somewhere at a rate of more than 2%-3% more than what you see here, you can think of a balance transfer to the lender that agrees for a lower rate deal. However, if the difference in the rate is 1% and the lender has not cut the rate after the latest repo rate cut, just wait for some time. Your lender could reduce the rate too. If that does not happen, switch your loan portfolio to another lender at a lower rate.

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The reason why a balance transfer is important in home loans is because of the fact that even a difference of 0.50%-1% can bring a significant difference to the interest outgo. For example, you are servicing a 20-year home loan of say 60 lakh at 8.90% per annum for the last 2 years. And, if we see the rates that prevail now, you could get a balance transfer deal at 7.80%-8.30%. In case the lender agrees at 8.20%, how much will the interest reduce?

Home Loan Repayment AspectsDetails
Original Loan Amount60,00,000
Tenure20 Years
Original Interest Rate8.90%
EMI @ 8.90%INR 53,598
Estimated Interest Outgo @8.90% Over 20 YearsINR 68,63,587
Outstanding Loan BalanceINR 57,61,963
Interest Paid Over 2 yearsINR 9,21,668
New EMI @ 8.20%INR 51,114
Estimated Interest Outgo @8.20% Over 18 YearsINR 52,78,749
Interest Paid Over 2 Years + Estimated Interest Outgo for the Remaining 18 YearsINR 62,00,417
Reduction in the EMI via a Balance TransferINR 2,484
Reduction in the Interest Outgo via a Balance TransferINR 6,63,170

So, you could see substantial savings in store for you with a balance transfer. The lender where you want to switch the outstanding loan can ask for a nominal fee to execute the balance transfer.

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Personal Loan Interest Rates September 2020
Fullerton India14.00% - 33.00%
HDFC Bank10.75% - 21.45%
ICICI Bank10.75% - 18.49%
IndusInd Bank11.25%
Kotak Bank10.99% - 20.99%
RBL17.50% - 24.00%
Standard Chartered Bank11.00% - 15.00%
Tata Capital10.99% - 18.00%
Home Loan Interest Rates September 2020
Axis Bank7.75% - 8.55%
Bank of Baroda7.00% - 8.40%
Citibank8.20%
HDFC6.90% - 7.65%
ICICI Bank6.95% - 8.05%
Indiabulls Housing Finance Limited8.80% - 11.05%
Kotak Bank7.20% - 9.30%
LIC Housing6.90% - 7.90%
Piramal Capital & Housing Finance9.00% - 9.10%
PNB Housing Finance8.60% - 9.45%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI6.95% - 7.60%
Tata Capital9.20% - 9.35%