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Banks offer limited time discounts on home loan interest rates

By Rishabh Chamoli | 2023-03-16

At a time when the economy is witnessing the shockwaves of inflationary forces, banks and financial institutions offer some respite from high interest rates with limited period discounts. Institutes like Bank of Maharashtra (BOM) and Bank of Baroda (BOB) have announced rebates on home loans. Such schemes provide a much needed push to the realty market suffering amid high input costs.

The Reserve Bank of India (RBI) has hiked the repo rate six times during the Financial Year (FY) 2022 to 23 by a total of 250 basis points (bps), taking it to the current 6.5 percent. Various banks and financial institutions have followed the footsteps of the apex bank by increasing their lending rates. This has automatically impacted the monthly takeout of the borrowers, discouraging many potential homebuyers from taking home loans and investing in real estate. With the speculation of another repo rate hike by 25 bps in the next bi monthly monetary meeting, the home loan rates are expected to further go north.

However, taking cognisance of festivals and special periods throughout the year, a number of banks announced limited time discounts by slashing their home loan interest rates from time to time. State owned Bank of Maharashtra (BOM) and Bank of Baroda (BOB) have again announced some limited period offers on their home loans. Read on to know more about it. 

Home loan rebate by Bank of Maharashtra
Effective from March 13, 2023, the Bank of Maharashtra (BOM) has slashed its home loan interest rates from 8.6 percent to 8.4 percent till March 31, 2023. Further, the bank has also waived off the processing fees on home, gold and car loans for the time period. BOM is also offering a special rate of interest on home loans for defence personnel, including paramilitary forces. This special rate will be applicable on salaried and retired defence professionals.

Previously, as a part of the Diwali Dhamaka scheme, BOM had decreased the interest rate on their home loans. Effective from October 17, 2022, home loans were offered from eight percent, as opposed to 8.3 percent. The bank also slashed personal loan interest rates from 11.35 percent to 8.9 percent in addition to waiving off the processing fee on their home, gold and car loans.

Home loan rebate by Bank of Baroda
The Bank of Baroda (BOB) has decreased home loan interest rates by 40 bps to 8.5 percent per annum in a bid to provide competitive home loan rates. The offer is available from March 5, 2023 to March 31, 2023. Linked to the credit score of the borrower, the limited time scheme is applicable on new home loans, balance transfers and home improvement loans. Additionally, the lending institute has also waived off the processing charges completely on home loans during the period.

Previously, BOB had rolled out another such offer wherein the home loan lending rates were decreased by 25 bps to 8.25 percent and the processing charges were waived off from November 11, 2022 to December 31, 2022. The special offer was applicable on balance transfers and linked with the credit score of the borrower.

Home loan rebate by HDFC Bank
Housing Development Finance Corporation (HDFC) and HDFC Bank announced interest rates from 8.40 percent onwards as a part of their festive scheme, applicable till November 30, 2022. Borrowers with a credit score of at least 750 were eligible for the low lending rate. Since Bank of Baroda has announced rebate, the borrowers have hope from other banks to announce similar offers before another repo rate hike this month.

Home loan rebate by State Bank of India
The State Bank of India (SBI) also issued discounts of up to 0.25 percent, 0.15 percent and 0.30 percent on home loans, top up loans, and loans against property, respectively. Further, SBI announced new home loans and takeover loans starting at 8.40 percent, and home renovation and makeover loans from 8.80 percent. The bank has waived off the home loan processing fee until January 31, 2023.

With lending rates regularly surging to curtail the rising prices, the offers are a welcome move from the lender community to prevent real estate and the allied industries from experiencing another slowdown after the pandemic.