Published date | 11 March, 2019

RBI Rate Cuts and Cheaper Home Loans to the subdued demand

The Reserve Bank of India monetary policy of June 2019 added a boost to common people. The major focus then shifted towards interest rates of home loan. And that was because RBI taking indicator at 575 percent has cut down the policy repo rate by 25 basis points.
Homebuyers will be hoping for cheaper loans from banks now, which will have a direct positive effect on the demand for housing. However, the transmission of this rate cut to the home loan seeker via lower lending rates from the banking system may take some time,”

Kanika Gupta Shori, Co-Founder and COO, Square Yards

Home loans and repo rates are related in that the fall or rise of repo rates directly affects home loan. This happens because what type of loan it is directly related to the floating rates and the banks alter it as per the repo rate movement. The Reserve Bank of India has also caught a hattrick by cutting down repo rates by 75 base points from February to June of this year's policies. Hence this makes opting for home loans a better and more attractive than earlier. 

We all know that if our banks are profit, we will profit as well. Home loans are profitable in that it can help you in your plan to buy or build the house of your choice. It is a strong performer in the segment landed by retail. The burden of collecting cash can be minimized and you can easily repay your bank in monthly installments. This results in a balanced and diversified debt repayment and expense. 


State Bank of India: 

State Bank of India introduced the very useful Repo Linked Loan Product for Home loans. Therefore it means that for every alteration in Reserve Bank of India's policy repo rate, there will be an effect on State Bank of India's interest rates in Home Loans. 

Home loan interests are of two kinds; salaried and nonsalaried. For loan reaching up to Rs30 lakhs, the interest rate is 8.55% to 8.65% for women with salary and 8.70% to 8.80% for women without salary. Loans exceeding Rs 30 lakhs but restricted to Rs 75 lakhs has an interest rate of 8.80% to 8.90% for salaries women and 8.95% to 9.05% for non-salaried ones. For loans exceeding R 75 lakhs, he rates become 8.90% to 9% and 9.05% to 9.15% for salaries and non-salaried women respectively.

The interest rates are raised by 5 basis points for men.


HDFC Bank: 

HDFC Bank has interest rates 8.60% to 9.10% to women receiving a salary. Women without salary are receiving 8.75% to 9.25 % on home loan reaching up to R's 30 lakhs. In the similar category, a loan exceeding Rs 30 lakhs but restricted to Rs 75 lakhs receives an interest of 8.85% to 9.35% and 9.00% to 9.50% for women receiving and not receiving salaries respectively. When the loan exceeds Rs 75 lakhs, salaried women receive 8.90% to 9.40% interest and non-salaried women receive 9.05% to 9.55% interest.

And as is the case with State Bank of India, HDFC’S rates of interest gets raised by 5 basis points for salaried and non-salaried men.


ICICI Bank:

Unlike the previous two banks, ICICI’s interest rates on home loans are set on the basis of self-employed or salaried borrowers. There is an interest rate of 9.05% on loan reaching upto Rs 35 lakh and 9.15% on loan exceeding Rs 30 lakhs but restricted to Rs 75 lakhs. When the loan exceeds Rs 75 lakhs the interest rate is 9.20% or salaried borrowers.

In case of self-employed borrowers, the interest rates on home loans range between 9.10% to 9.25%.


Bank of Baroda:

In case of Bank of Baroda, home loans are given in various forms of schemes.

Baroda Home Loan & Baroda Home Improvement Loan- the Interest rates on home loans are obtained from One year MCLR to One year MCLR +1.00%.

Baroda Home Loan Advantage – In case of loan reaching up to Rs 75 lakhs, the interest rate is similar to the one stated above. However, when the loan exceeds Rs 75 lakhs, the rates become 0.25% more than normal rates.


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Square Yards is a technology-enabled, global real estate aggregator and India’s largest player for primary residential real estate. It’s subsidiary Square Capital is one of the largest marketplace for secured mortgages in India. Square Yards platform offers an integrated consumer experience & covers the full real-estate journey from search, discovery to research, transactions, home loans and post-sales service – fully integrating buyers to an extensive network of 500+ partner real estate developers, and 90+ banks & NBFCs. Square Yards is led by accomplished professionals, ex-bankers, and Ivy school alumni and is backed by the competence of more than 2500 employees in 30 cities and ten countries.