One must closely observe their home loan equated monthly installments (EMI) as home loan interest rates are on the rise after the Reserve Bank of India (RBI) announced a hike in the repo rate by 40 basis points to 4.4 per cent on May 04, 2022. This steep hike came roughly after almost two years since the pandemic hit the world in 2020.
Below we have listed five banks that offer cheapest home loan interest rates.
|Name of Banks||RLLR||Minimum Interest rate (%)||Maximum Interest rate|
|Bank of Maharashtra||7.2%||6.8%||8.2%|
|Bank of Baroda||6.9%||6.9%||8.25%|
|Union Bank of India||7.2%||6.9%||8.6%|
|Punjab & Sind Bank||6.6%||6.9%||7.75%|
|Bank of India||7.25%||6.9%||8.6%|
Note - Home loan interest rates for all lenders as of 9th June 2022
Source: Compiled by ETIG
If you have a home loan with a balance of ₹20 lakh and a balance tenure of 20 years at 6.5% pa interest, your EMI will increase by ₹1,078 from ₹15,990 to ₹16,604. You may have to pay an extra ₹36 in EMI for every lakh rupee borrowed. However, as defined by the regulator, banks only offer housing loans ranging 75% to 90% of the total cost of the house.
Amit Kumar Tanwar, Founder & CEO of Loan4MSME, says “With the next round of repo rate increases, finding a low-interest rate home loan product will not be easy and home loan product will be seen moving upward in the range of 8%+ interest rate. This is the perfect time for home loan borrowers to transfer their loans to ensure their EMI does not go up.
Moreover, they get ready for a further upward move in the interest rate and if they can get a good deal on fixed-rate home loans then it would be really great. For the next 1 to 2 years time frame, interest rates may not ease soon. Inflation at 7% is above the set target of RBI and to bring it down to around 4% to 5% level, RBI will tighten the noose on easy liquidity by using policy tools like an increase in repo rate,” he added.