Bank of Baroda Cuts Housing Loan Rate to Industry Low

Bank of Baroda Cuts Housing Loan Rate to Industry Low

In doing so, the Bank of Baroda has decided to offer home loans at its one-year marginal cost of funds-based lending rate (MCLR) without any spread to customers with CIBIL score of 760 and above.

“We will also allow customers with CIBIL score of -1 to 0 (no borrowing record) to get this benefit,” a Bank of Baroda  official said.

Following the cut, the housing loan rate stands between 8.35% and 9.35%.

The bank has also waived-off switchover fees for existing customers who wish to shift from the base rate to MCLR.

“In case of existing home loan borrowers of Bank of Baroda , who are not yet converted to MCLR rate structure can avail of the benefit of reduced rate of interest by converting from base rate to MCLR without any additional charges,” the bank said.

Bank of Baroda  said on a housing loan of Rs. 50 lakh, reduction in interest rate by 0.7% will help a home buyer save Rs.  2,496 per month and about  Rs. 9 lakh during the loan tenure of 30 years.

The rate of interest on car loans and mortgage loans starts at 8.85% and 10.35%, respectively.

Meanwhile, Bank of India (BoI) has also revised its retail lending rates. Housing loans will be available at 8.65% for women and at 8.7% for others, while vehicle loans will be offered at an interest of 9.35%.

As reported earlier, savings from the switchover to the MCLR are now very impressive -  almost 6-fold in some cases after the latest rate cuts - that more customers might migrate to it.

For a Rs 50-lakh loan from State Bank of India (SBI) with a tenure of 20 years, a borrower can now save about Rs. 6 lakh. Given SBI’s base rate is 9.25%, a customer would repay Rs. 1,11,46,423. A switch to the MCLR at 8.65% — 8% plus a spread of 0.65% — would lower the repayable amount to Rs. 1,05,28082. Add the switchover fee of Rs. 25,000 and this would be Rs. 1,05,53,082. That’s savings of Rs. 5.93 lakh.

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