Indian Public sector bank, Bank of Baroda (BoB) announced that it is offering home loans at a reduced interest rate of 8.30% to the eligible customers.
BoB is the second bank to announce a rate cut after State Bank of India (SBI) dropped its home loan interest rates to 8.30% in the previous week.
As home loans are being linked to the bank’s marginal cost of funds based lending rates (MCLR), Bank of Baroda mentioned that it is offering home loans at its one-year MCLR of 8.30%. The interest rate, according to the lender, is applicable to home loans of all sizes and is available for a repayment period of up to 30 years.
All categories of people including salaried and self-employed can avail home loans at that interest rate. The bank said that it will not mark-up on its MCLR which means it will not spread/increase the home loan interest rate for the customers with high credit scores.
In 2016, BOB became the first bank to issue home loans based on the borrower’s credit score. Since April last year, it has been providing home loans either at lowest interest rates or at the most competitive rates. It was also the first bank to cut home loan interest rates in January 2017 influencing other banks to follow.
Talking about the lowest rate of interest offered by public sector banks, BOB pointed that the rates are applicable only to a small category of customers such as salaried women who need a home loan of less than Rs.30 lakh. If a male business owner with decent credit score applies for a home loan of more than Rs.75 lakh he will be charged more than 8.5% interest, the bank added.
Mr. Ashok Kumar Garg, ED of BOB stated that the bank has decided to offer home loans at its one-year MCLR to continue being the most competitive bank in the industry. It aims to become the most agile bank in the retail loan category by leveraging the digitalization in banking space and by offering quick turnaround time.
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