Revision in RBI Repo Rates Cuts Further Home Loan Interest Rate in 2020
Whenever an individual borrows money from a lender to purchase anything or expand one’s business or for education, interests are levied upon by the lender whether you repay the amount lump sum or in instalments. In case of home loans, the lowest home loan interest rate in 2020are linked to the repo rate declared by the Reserve Bank of India (RBI) periodically.
Considering the all-time low repo rate, all banks have the lowest home loan interest rate in 2020.
All commercial banks, small financing banks and NBFC’s have considered repo rate as their benchmark as per the directive given by the RBI. Considering the all-time low repo rate, all banks have the lowest home loan interest rate in 2020.
Being the central bank of India, all banks have to comply as per the RBI directives, and they have directed to link the interest rates to their repo rates as the external benchmark. The floating interest rates linked to the repo rate are known as the repo rate linked lending rate (RRLR). This RRLR consists of the repo rate plus the margin for the bank, which is allowed by the RBI and forms the lowest home loan interest rate in 2020.
But the repo rate is revised every two months by the RBI, which leads to the fluctuation in the RRLR, but the margin claimed by a particular bank will remain the same against all its borrowers. The risk premium, however, can differ individual to individual. The banks usually claim higher premiums from a self-employed individual compared to a salaried individual.
Here is a list of the banks in India having the lowest home loan interest rate in 2020.
- Union Bank of India – 6.8 (RRLR)
- Punjab National bank (PNB) – 6.65 (RRLR)
- Bank of India (BOI) – 6.8
- State Bank of India (SBI) – 7.05 (RRLR)
Considering the pandemic COVID 19 situation, the real estate market is really in a dump, and the houses are not being sold as per the required rate. In the near future, the prices are predicted to crash for real estate. Considering the lowest home loan interest rate in 2020, it will be a great opportunity to buy a new home at an affordable price and at an affordable interest rate.