Home Loan Interest Rate

Home Loan Interest Rate in India is best ever, among the last decade. This clearly depicts; that if a person wants the home loan or wants to transfer the existing home loan, then there is a significant opportunity for them to save money. Even a difference of 50bps i.e. 0.5%will lead to the huge difference in saving annually. One can save a lot by transfer of home loan, as the person is paying more interest rate on the existing home loan. The demand and supply for home loan in the retail sector has changed the mindset of both lenders and buyers. Before availing any loan; normally people ask for the rate being offered and the options available in the market. This has made the customer aware to switch from one bank to another banks or NBFC. A minor variation in the home loan interest rate can lead to massive savings.

Customer acquisition has increased tremendously with banks, and even customer is much more aware about the home loan interest rates; that are prevailing in the market. The decreasing trend in home loan interest rate has changed people’s preference from fixed to floating. Moreover, the competition is tougher between the loan providers to acquire more and more customers, even with the shield of 0.5% difference in the interest rate.

Some private portals are giving online comparison in home loan interest rate with proper rate chart between both public and private sector banks. This has proved fruitful to make the customer aware about the interest rate trend in the market. The chances of fooling the customer in term of rates have gone down; because the leverage of switching from one bank to another bank or refinancing is always available with the customer.

There is an enormous difference in fixed and floating interest rate. Fixed interest rate remains fixed for the whole tenure of the loan, but floating rate will keep on changing as per the market fluctuations. It means with fixed rate option; the customer will not get impacted with the fluctuations of the market. However, it does not mean that the customer will get the benefit of the same. In last 5 months, the decreasing trend of home loan interest rate has benefitted most of the customers. The Reserve Bank of India controls the trend of interest rates in the market.  In order to control the inflation, the home loan interest rate is increased by the RBI. Once the situation gets control; then the same is reduced. This leads to fluctuations in the market which leads to change in the interest rate, which is normally known as floating interest rate.