Two days after the Reserve Bank of India (RBI) hiked its repo rate for the fifth time this year by 35 basis points since May, many banks have been contemplating to hike their home loan interest rates to sink with the rate hike. After the latest revision by the central bank, the repo rate now stands at 6.25 per cent. On Friday, public sector banks Punjab National Bank and Canara Bank announced that they would tweak their home loan interest rates linked to the repo rate.
Punjab National Bank
The public sector bank has announced that it has hiked the repo-linked home loan interest rate by 35 bps. The bank’s website stated that: “The RLLR has been changed from 8.40 per cent to 8.75 per cent w.e.f. 08-12-2022 for all customers. Along with RLLR, BSP of 25 bps will be charged.” The RLLR’s full form is repo-linked loan interest rate. The RLLR is calculated as the current Repo Rate (6.25 per cent) + Mark-up (2.50 per cent).
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The effective rate on existing home loans from December 8 will be 9 per cent per annum. Before the RBI repo rate hike this month, the home loan interest rate was 8.65 per cent.
The rates are applicable to loans up to Rs 1 crore. Loan seekers can extend the repayment tenure to 30 years, which is the maximum. The processing fee applicable for the loan application is 0.35 per cent of the total loan amount available plus GST.
Applicants buying EWS, LIG, and MIG houses can enjoy subsidised rates under the Pradhan Mantri Awas Yojana (Urban) Mission scheme.
Canara Bank
The Bengaluru-headquartered public sector bank has said the RLLR of the bank will be 8.80 per cent from December 7, 2022. The RLLR calculation is the same as above.
After the latest hike on December 7, the effective interest rate of Canara Bank on existing housing loans will be between 8.55 per cent per annum and 10.80 per cent per annum.
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The bank offers home loans for a maximum period of 30 years. The bank at present is offering loans at a concession for low-risk customers. Under this, women borrowers can avail of a loan at 8.55 per cent per annum. General borrowers can avail of it for 8.60 per cent. The offer is valid till December 31, 2022.
As per the bank rules, customers can avail home loan amount 4 times their gross annual income and up to 5 years’ gross income permitted in select cases. The bank charges a nominal processing fee of 0.50 per cent for the loan. One can avail up to 90 per cent of the property value if it’s a new house/flat. It also offers renovation loans of up to Rs 15 lakh for upgrades, repairs and renovations.
Home loan rates
The RBI on Wednesday, December 7, hiked the repo rate by 0.35 per cent, taking the rate to 6.25 per cent from 5.9 per cent in May this year. This financial year, the RBI has hiked the repo rate five times since May to tame multi-year high inflation, which also led to a significant climb in home loan EMIs. As most banks have linked their lending rates with repo rates on various term loans, and hence, any change in the repo rate will have an effect on the EMIs as well.
