5 banks offering the lowest interest rates; Check details

As domestic economic factors look positive and the economy looks to a recovery, the real estate sector has seen an increase in demand. However, the high interest rates of recent times are having a negative impact on the demand for housing, as mortgages become more expensive, which makes houses more expensive. Here’s a guide to home loans and five banks with the lowest interest rates.

Two types of interest rates: fixed and variable

Two types of loans are offered by banks. When you take out a loan, you need to confirm what type of interest rate you are being offered – fixed or variable. In the fixed rate scheme, the interest rate remains the same throughout the life of the loan. For example, if you take out a loan at a fixed interest rate of 8%, that interest rate will remain the same throughout the EMI period.

In the floating interest rate, changes in the bank’s MCLR will affect your EMI amount. For example, if the RBI raises its repo rate, the banks will pass on the rate hike and raise your interest rate. This will increase your NDEs.

Banks offering the lowest interest rates

Private sector lender HSBC Bank is currently offering the cheapest interest rate of 6.85-7.75%. Canara Bank offers interest rates of 7.05 to 11.85% on home loans. Karur Vysya Bank offers home loans at interest rates of 7.15-9.35%. Mortgage company Bajaj Housing Finance is currently offering an interest rate starting at 7.2%. Bank of Maharashtra offers interest rates of 7.30 to 9.45 on home loans.

The interest rate varies from person to person depending on the borrower’s risk profile like CIBIL score, gender, salaried or self-employed, and loan amount. If you have an excellent CIBIL score, you will get a cheaper interest rate compared to those with lower scores. Also, the higher the loan amount, the higher the interest rates.

In an effort to control inflation, the Reserve Bank of India (RBI) raised the key repo rate by 50 basis points (bps) in early June, the second hike in nearly a month after the Central bank’s Monetary Policy Committee rose 40 basis points. in the off-cycle policy review in May. Retail price inflation in May stood at 7.04%, which is above the target limit of 2-6% set by the RBI.

Following this, several lenders including ICICI Bank, State Bank of India and HDFC Bank raised their interest rates for deposits and loans, which made lending more expensive.

According to a report by property consultancy Anarock, rising interest rates in the country following recent RBI repo rate hikes and rising house prices are negatively affecting house sales. Sales in seven major cities moderated 15% in the June 2022 quarter to 84,930 units from 99,550 units in the March 2022 quarter, according to Reuters. The Mumbai Metropolitan Region (MMR) recorded the highest sales of around 25,785 units in the second quarter of 2022, followed by the NCR with almost 15,340 units.

The report adds that developers limited new supply to approximately 82,150 units in the June quarter of 2022 from 89,150 units in the first quarter of 2022, a decline of 8% over the period. MMR and Pune were the only markets to see new launches up 26% and 14% QoQ, respectively. The remaining five cities saw their new launches decrease.

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Garland K. Long