Union Bank of India cuts home loan interest rate to 6.7% – ET RealEstate

MUMBAI: Union Bank of India has slashed interest rate on home loans for salaried to 6.7%, which is lower than the general category mortgages of State Bank of India (SBI), which has traditionally offered the lowest interest rate.

Union Bank charges 6.7% for loans up to Rs 30 lakh for salaried borrowers with a credit score of at least 700, which must include a woman applicant. For loans above Rs 30 lakh and up to Rs 75 lakh, the best rate is 6.95%. For larger sized loans, interest rates begin at 7%. For salaried borrowers, where a man is the sole borrower, the rate is 6.75%, which is also the rate for non-salaried borrowers.

SBI’s home loan rates for women borrowers for loans up to Rs 30 lakh start from 6.95%. Last month, LIC Housing Finance had reduced interest rates to 6.9%— its lowest ever. Another public sector lender, Bank of Baroda, has home loans starting from 6.85%. Market leader HDFC currently charges 6.95% for loans up to Rs 30 lakh where the borrower is a woman. For loans up to Rs 30 lakh to Rs 75 lakh, the interest rate rises to 7.2%.

Home loan rates are expected to dip further in coming weeks with the Reserve Bank of India widely expected to cut its benchmark repo rate by 25 basis points (100bps = 1 percentage point) in its next bi-monthly policy review to be announced on August 6. Since banks have to mandatorily link the reference rate for the home loans that they offer to the repo, any change by the RBI will bring down the cost of funds for borrowers.

While there has been a drop in property sales during the lockdown, lenders are also trying to grow their market share by attracting existing borrowers from other lenders through refinance. Union Bank of India, which has acquired Andhra Bank and Corporation Bank, has increased its branch network following the merger.

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