On February 7, 2019, the Reserve Bank of India (RBI) announced a cut in the repo rate by 25 basis points, during its bi-monthly monetary policy meet. With this, the repo rate now stands at 6.25 per cent, whereas the reverse repo rate is six per cent. The RBI also changed its monetary policy stance from ‘calibrated tightening’ to ‘neutral’, indicating that interest rates may remain stable in the near future.
The repo rate cut came as a surprise for the real estate sector. The positive announcements made in the interim budget 2019, along with the reduction in the repo rate, may boost the growth of residential realty. However, the cut in the repo rate may not translate into lower home loan interest rates immediately, as banks usually take time to adjust their marginal cost of funds-based lending rates (MCLR). Also, the immediate beneficiary of the rate cut would be new home buyers, because existing home loan borrowers will get the benefit only when the MCLR linked to their loan is reset.
In last one month, the home loan interest rates offered by most of the banks largely remained stable, with banks like PNB, Central Bank and Corporation Bank hiking the rate by around 0.05 per cent. In the coming month, the impact of the latest repo rate cut may reflect, by way of softening in the interest rates across banks.
To make the selection of home loan product more comfortable for the home buyers, we have presented the interest rate range, EMI and processing fees by various banks, in the table given below. The EMI has been calculated based on a loan of Rs one lakh for a tenure of 20 years. You can easily calculate the EMI for the desired amount, by multiplying loan amount (in Rs lakhs) with the EMI range corresponding to selected bank mentioned in the table. For example, the interest rate mentioned for Central Bank is 8.65 per cent per annum and the corresponding EMI for Rs one lakh is Rs 877. Now, if you want to calculate the EMI for Rs 30 lakhs, then, simply multiply the EMI with 30, i.e., Rs 877 x 30 = Rs 26,310 per month (approximately), which would be the EMI for 20 years tenure.
Interest rate and processing charge on home loan by banks (with indicative EMI)
|Lender’s name||Floating interest rate (Per cent, per annum)||EMI per Rs one lakh (in Rs)||Processing fee|
|Axis Bank||8.9-9.15||893-909||Up to one per cent of the loan amount, subject to a minimum of Rs 10,000.|
|Bank of Baroda||8.75-9.75||884-949||100 per cent waiver of processing charges, subject to recovery of out of pocket expenses of Rs 7,500 plus GST.|
|Bank of India||8.7-9.6||881-939||0.25 per cent of loan amount (Minimum of Rs 1,000 and maximum of Rs 20,000)
** Processing charge waived up to March 31, 2019.
|Canara Bank||8.75-8.95||884-897||0.50 per cent (Minimum of Rs 1,500 and maximum of Rs 10,000).|
|Central Bank||8.65||877||0.50 per cent of the loan amount, subject to a maximum of Rs 20,000.|
|Corporation Bank||8.65-9.3||877-919||Up to 0.50 per cent of the loan amount (Maximum of Rs 50,000).|
|HDFC Ltd||8.9-9.8||893-952||For salaried individual and self-employed professionals: Up to 0.50 per cent of the loan amount, or Rs 3,000, whichever is higher.
Self-Employed non-professionals: Up to 1.50 per cent of the loan amount, or Rs 4,500, whichever is higher. (Taxes extra)
|ICICI Bank||9.1-9.3||906-919||0.5 per cent, plus applicable taxes.|
|IOB||8.7-8.95||881-897||0.5 per cent, up to Rs 25,000.|
|PNB||8.75-8.85||884-890||0.35 per cent of the loan amount (Minimum of Rs 2,500 and maximum of Rs 15,000) *Fully waived till March 31, 2019.|
|Syndicate Bank||8.75||884||Minimum of Rs 500 to maximum if Rs 5,000.|
|UCO Bank||8.7-8.95||881-897||0.50 per cent of the loan amount (Minimum of Rs 1,500 and maximum of Rs 15,000).|
|United Bank||8.65||877||0.59 per cent (Minimum of Rs 1,180 and maximum of Rs 11,800).|
|Union Bank||8.8-8.95||887-897||0.50 per cent of the loan amount, subject to a maximum of Rs 15,000 (plus applicable taxes).
Note: 50 per cent concession in processing charges based on CIBIL score, till March 31, 2019.
The EMI is based on a loan amount of Rs one lakh for a tenure of 20 years.
Interest rates are based on the floating rate system. Rates may be subject to revision after a specified tenure, depending on the bank’s terms and conditions. The EMI range is indicative and is calculated, based on the interest rates given in the table. In an actual situation, it may include other charges and fees, as per the bank’s terms and conditions. The actual interest rate may vary, based on the credit profile of the loan applicant. Data in the table is only for illustration purpose.
Data taken from the respective bank’s websites, as on February 8, 2019.