Many banks have reduced interest rates on home loans since the beginning of the festive season.
Now another bank has cut interest rates on home loans.
This is Union Bank of India. The bank on Tuesday announced a cut in its home loan interest rates.
Union Bank of India’s home loan interest rate will now start from 6.4 percent.
These home loan interest rates are among the lowest in the entire industry. The reduced interest rate has come into effect from October 27.
The new rates will be applicable to customers who are applying for a new loan or want to transfer their existing loan including balance transfer.
This is the lowest home loan rate ever offered by a mainstream bank.
What should be the credit score
Rajkiran Rai, MD & CEO, Union Bank of India said, “We are offering Home Loan Rate of 6.4 per cent to the best category of customers with credit score above 800.
Low-cost deposit rates allow us to cut even more.
He said the bank was operating with low margins as the top rated customers are unlikely to default on loans and RBI also gives low risk-weightage to home loans, which enables banks to lend more with less capital.
Home Loan Rates Competitive
Home loan interest rates have become extremely competitive these days.
Now it is not just about interest rates, says Rai.
They have partnered with most of the major builders for faster loan conversion.
They say that we have launched several channels for lead generation including website and missed call banking.
Interest rates not rising fast
Home loan rates are now linked to the repo rate of RBI. Hence, the customers are not exposed to the risk of sudden sharp increase in rates.
RBI has allowed banks to extend the tenure instead of increasing the EMI if the repo rate increases.
Home Loan Rate War
The festive season is witnessing a home loan rate war between banks, even as bond yields have started hardening.
With low credit growth of 7 per cent so far this year, banks are looking to expand their portfolio by pursuing home loans, which are seen as low-risk advances.
Last month, SBI cut home loan interest rates as part of the festive season offer.
The bank had also waived processing fees on home loans.
SBI’s home loan interest rate is being 6.7 percent.
Any loan can be availed at this interest rate. Earlier, borrowers who took loans above Rs 75 lakh had to pay an interest rate of 7.15 per cent.
With the introduction of the festive offers, a customer can avail a home loan of any amount at an interest rate of 6.7 per cent.