These 5 Banks Offer Lowest Interest Rates On Home Loans; Check Details

The demand for real estate has been increasing as domestic economic indicators are favourable and the economy appears to be recovering. However, the house loans have become more expensive and the high interest rates are negatively influencing housing demand.

Let us know more about home loans and the five banks with the lowest Annual Percentage Rate (APR).

Two Types of Interest Rates: Fixed And Floating

There are two different types of loan that banks provide- fixed and floating. Any time you apply for a loan, you should first check if the interest rate is fixed or floating. The interest rate stays the same during the loan term under the fixed interest regime. For example, if you take out a loan with a fixed interest rate of 8%, this interest rate will remain the same for the duration of the EMI period.

In case of floating interest rate, the amount of your EMI will change if the bank’s MCLR changes. For instance, if the RBI increases its repo rate the banks will pass the rate increase through to you and boost your interest rate. Your EMIs will rise as a result.

Banks Offering Lowest Interest Rates on Home loans

The lowest interest rate on home loans is now being offered by private sector lender HSBC Bank, which ranges from 6.85 to 7.5%. Home loans from Canara Bank have interest rates ranging from 7.05 to 11.85%. Home loans are available from Karur Vysya Bank at interest rates ranging from 7.15 to 9.35 percent. Interest rates starting at 7.2 percent are currently being offered by mortgage company Bajaj Housing Finance. Home loan interest rates from Bank of Maharashtra range from 7.30 to 9.45 percent.

The interest rate changes from person to person depending on the borrower’s risk profile, including their CIBIL score, gender, whether they are employed or not, and the size of the loan. In comparison to people with lower scores, you will pay a lower interest rate if your CIBIL score is excellent. The interest rates will be higher if the loan amount is big.

Early in June, the Reserve Bank of India (RBI) lifted the benchmark repo rate by 50 basis points (bps), the second increase in less than a month after the Monetary Policy Committee raised the rate by that amount in May during an off-cycle policy review. The retail inflation in May was at 7.04 percent, exceeding the RBI’s target range of 2 to 6 percent.

Following this, a number of lenders raised their interest rates for both deposits and loans, which in turn made loans more expensive. These lenders include ICICI Bank, State Bank of India, and HDFC Bank.

As per reports, the recent increases in the repo rate by the RBI and the country’s growing interest rates are having a negative impact on home sales. Sales in seven major cities decreased by 15% in the June 2022 quarter to 84,930 units from 99,550 units in the March 2022 quarter. In Q2 2022, the Mumbai Metropolitan Region (MMR) had the greatest sales with around 25,785 units, followed by the National Capital Region (NCR) with nearly 15,340 units.

According to the report, developers limited new supply to 82,150 units in June 2022 quarter as opposed to 89,150 units in Q1 2022, an 8% decrease over the same period. The only markets where new launches has  increased are MMR and Pune, where they did so by 26% and 14% q-o-q, respectively.


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