The majority of banks have adopted a floating rate model linked to the RBI’s repo rate, which is announced quarterly during the monetary policy meeting, according to the The Economic Times report. This means that the cost of borrowing for customers will change in accordance with any changes made by the RBI to the repo rate. If the repo rate increases, the cost of borrowing will also increase, and if the repo rate decreases, the cost of borrowing will decrease.
The report added that in addition to the external benchmark rate set by the RBI, banks are allowed to charge borrowers a margin plus a risk premium.
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The interest rate on home loans is determined by various factors such as the borrower’s Cibil score, loan amount, tenure, and income. Home loans generally have a duration ranging from 3 to 30 years due to the significant amount of money involved.
Let’s take a look at some specific interest rates offered by different banks. HDFC Bank offers home loans with a minimum interest rate of 8.45 percent and a maximum interest rate of 9.85 percent.
Indusind Bank provides loans with a minimum interest rate of 8.5 percent and a maximum rate of 9.75 percent.
Indian Bank’s Repo Linked Lending Rate (RLLR) stands at 9.20 percent, with the minimum interest rate at 8.5 percent and the maximum rate at 9.9 percent.
Punjab National Bank’s RLLR is 9.25 percent, offering a minimum interest rate of 8.6 percent and a maximum rate of 9.45 percent.
On the other hand, Bank of Maharashtra’s RLLR is set at 9.30 percent, and they provide home loans with a minimum interest rate of 8.6 percent and a maximum rate of 10.3 percent.
