Conventionally, State Bank of India (SBI), India’s largest lender, has accessible home loans at cheapest rates. But it has now been upstaged by competing Bank of Baroda, which has dropped it home loan rate to as low as 8.35 per cent.
Bank of Baroda has condensed its home loan rates by 70 basis points to 8.35 per cent, which will be relevant for customers having a strong Cibil score, which is a measure of creditworthiness of the borrower.
At 8.35 per cent, Bank of Baroda’s home loan rate is lesser than industry leader State Bank of India’s 8.50 per cent on deal.
State Bank of India and some other financiers, containing private sector major HDFC Ltd, have now reduced their rates. Bankers have ascribed reduction in interest rates to swell in deposits with the banks post-demonetizations.
Bank of Baroda also held its existing customers whose loans are related to base rate can also switch to the fresh MCLR or marginal cost of funds-based advancing rate regime without any additional charges. However, several other lenders charge a switch-over fee, which is a least of Rs 10,000 or 0.5 per cent of the remaining loan amount in case of SBI.
Banks have swapped to MCLR as their new benchmark loaning rate from April last year, trading the base rate system for new borrowers. All new fluctuating rate loans are linked to MCLR and banks charge a best over the MCLR to offer a loan.