Five banks that offer cheaper home loan rates in India

Five banks that offer cheaper home loan rates in India
  • Home loan rates have been at their lowest level in the last 10 years, which has proven quite fruitful for the entire sector.
  • However, this may change in some time as reports say that the RBI could hike interest rates in the next policy meeting, coming up in June.
  • Till then, here is a list of five banks that are currently offering lower loan rates.
The home loan segment has been in the limelight over the past two years as mortgage rates have been at a 10-year low for quite some time now.

However, this may change in some time as there are expectations that the Reserve Bank of India could hike interest rates in the next policy meeting, expected to take place in June.

One of the first few signals of home loan interest rates rising is that the State Bank of India has announced a hike in the marginal cost of lending rate (MCLR) on loans by ten basis points across tenures. The new rates are effective from April 15, 2022.

Marginal Cost of Funds based Lending Rate (MCLR) is the minimum lending rate below which a bank is not permitted to lend as per RBI guidelines. RBI implemented MCLR on April 1, 2016.

This comes at a time when several central banks across the world have been preparing to, or have already increased interest rates to fight inflation, with the RBI being one of the few major exceptions.


The MCLR hike by SBI comes after more than three years. Following this, other large lenders, including Bank of Baroda, Axis Bank and Kotak Mahindra Bank have also hiked rates. Other banks and housing finance companies could follow suit soon.

HDFC has been one of the largest home loan players in the industry, after SBI. Analysts expect the home loan segment of the large bank to become strong post-merger.

Despite that, these five public sector banks provide loans at a cheaper rate than any other bank:
BanksUp to 30 lakh
Bank of Maharashtra6.40% - 8.30%
UCO Bank6.50% - 7%
Bank of India6.50% - 8.35%
Indian Bank6.50% - 7.70%
Punjab & Sind Bank6.50% - 7.60%
Source: Respective banks

Banks generally offer two options when it comes to home loan interest rates – fixed and floating.

For a Fixed rate loan, the rate of interest is fixed either for the entire tenure of the loan or a certain part of the tenure of the loan. In case of a pure fixed loan, the equated monthly installment (EMI) remains constant.

According to RBI, if a bank offers a loan that is fixed only for a certain period of the tenure of the loan, borrowers are advised to find out if there is a reset clause – that is, will the bank raise rates after the agreed-upon period is over.

Borrowers can also try to negotiate a lock-in that should include the rate that you have agreed upon initially and the period the lock-in lasts.

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