The Reserve Bank of India’s decision to keep the repo rate unchanged at 4% for almost a year now has led to a majority of banks reducing their floating home loan interest rates. In fact, there are at least 15 banks that are currently offering home loans starting at under 7% p.a. This trend has begun ever since the central bank directed banks in October 2019 to link their floating-rate home loans to an external benchmark like the repo rate. As such, if you’re planning to buy a house, have the necessary margin funds, a credit score above 750-800 and the required repayment capacity, this might be a great time for you to realise your dream.
It will be worthwhile to re-emphasize here that you must have a good credit score in order to enjoy the best deals. You also need to maintain a good credit score throughout the loan tenure as any substantial increase in your score could trigger the credit risk margin and lead to a higher applicable interest rate and steeper loan EMIs. That being said, keep in mind these repo-linked loans would see a quick and proportionate increase in interest rates whenever the RBI hikes the key policy rate in the future.
So, if you’re planning to take a home loan, here’s a list of 15 banks that are currently offering them starting at under 7% p.a. Do note, we have only considered the lowest advertised floating-rate home loan interest rate for each of the banks mentioned in the table below, and the interest rate applicable to you could be higher based on your age, income, gender, credit score, loan amount, loan-to-value ratio or any other terms and conditions of your chosen lender.
Banks Currently Offering Floating-Rate Home Loans Starting At Under 7% p.a.
Lowest Advertised Home Loan Interest Rate
Kotak Mahindra Bank
Bank of Baroda
Union Bank of India
Punjab National Bank
Punjab & Sind Bank
Bank of Maharashtra
State Bank of India
Bank of India
Disclaimer: Data taken from respective bank’s website on April 16, 2021.
Data compiled by BankBazaar.com, an online marketplace for loans, credit cards and more.