Bank Of Baroda Beats SBI In Offering Cheapest Home Loan

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Bank Of Baroda Beats SBI In Offering Cheapest Home Loan

Posted on : Tuesday 10th of January 2017

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Traditionally, State Bank of India (SBI), India's biggest lender, has offered home loans at cheapest rates. But it has now been upstaged by rival Bank of Baroda, which has lowered it home loan rate to as low as 8.35 percent.

State-run Bank of Baroda (BoB) has reduced its home loan rates by 70 basis points to 8.35 per cent, which will be applicable for customers having a strong Cibil score, which is a measure of creditworthiness of the borrower.

At 8.35 per cent, Bank of Baroda's home loan rate is lower than industry leader State Bank of India's 8.50 per cent on offer. 

SBI and some other lenders, including private sector major HDFC Ltd, have already reduced their rates. Bankers have attributed reduction in interest rates to surge in deposits with the banks post-demonentisation.

Bank of Baroda also said its existing customers whose loans are linked to base rate can also switch to the new MCLR or marginal cost of funds-based lending rate regime without any additional charges. However, several other lenders charge a switch-over fee, which is a minimum of Rs 10,000 or 0.5 per cent of the outstanding loan amount in case of SBI.

Banks have switched to MCLR as their new benchmark lending rate from April last year, replacing the base rate system for new borrowers. All new floating rate loans are linked to MCLR and banks charge a premium over the MCLR to offer a loan.

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