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Five banks that offer cheaper mortgage rates in India

  • Mortgage rates are at their lowest level in 10 years, which is proving to be rather fruitful for the whole sector.
  • However, this may change in some time as reports indicate that the RBI may raise interest rates at the next policy meeting, which will take place in June.
  • In the meantime, here’s a list of five banks that are currently offering lower lending rates.

The mortgage segment has been in the spotlight for the past two years, with mortgage rates at 10-year lows for quite some time.

However, this may change in some time, as it is expected that the Reserve Bank of India may raise interest rates at the next policy meeting, which is expected to take place in June.

One of the first signs of rising interest rates on home loans is that the State Bank of India announced a hike in the marginal cost of lending (MCLR) on loans by ten basis points across all terms. . The new rates are in effect from April 15, 2022.

The Marginal Cost of Funds Lending Rate (MCLR) is the minimum lending rate below which a bank is not allowed to lend as per RBI guidelines. RBI implemented the MCLR on April 1, 2016.

This comes at a time when several central banks around the world are preparing or have already hiked interest rates to fight inflation, with the RBI being one of the few major exceptions.

The rise in MCLR by SBI comes after more than three years. Following this, other major lenders including Bank of Baroda, Axis Bank and Kotak Mahindra Bank also raised their rates. Other banks and housing finance companies may soon follow suit.

HDFC has been one of the largest mortgage lenders in the industry, after SBI. Analysts expect the big bank’s home lending segment to become strong after the merger.

Despite this, these five public sector banks provide loans at a cheaper rate than any other bank:

Banks Up to 30 lakh
Bank of Maharashtra 6.40% – 8.30%
UCO Bank 6.50% – 7%
Bank of India 6.50% – 8.35%
Indian bank 6.50% – 7.70%
Bank of Punjab and Sindh 6.50% – 7.60%

Source: Respective banks

Banks generally offer two options when it comes to home loan interest rates: fixed and variable.

For a fixed rate loan, the interest rate is fixed either for the entire term of the loan or for a certain part of the term of the loan. In the case of a pure fixed loan, the assimilated monthly payment (EMI) remains constant.

According to RBI, if a bank offers a loan that is only fixed for a certain period of the loan term, borrowers are advised to find out if there is a reset clause – that is, if the bank will raise rates after the deal- on period is over.

Borrowers can also try to negotiate a lock-up which should include the rate you initially agreed to and the duration of the lock-up.

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