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State-run Bank of Baroda today reduced home loan rates by 70 basis points to the industry's lowest level of 8.35 per cent that will be applicable for customers having a strong Cibil scores.
At 8.35 per cent, the rate is lower than industry leader State Bank of India's 8.50 per cent offer.
The bank's existing customers who are on base rate can also switch to the new MCLR without any additional charges.
Against this almost all banks, including SBI is charging a minimum of Rs 10,000 or 0.5 per cent of the outstanding loan amount as a switchover fee.
BoB has reduced its marginal cost of fund based lending rates (MCLR) by 55-75 basis points across all tenors effective January 7.
"The home loan rate is linked to their Cibil scores. A customer with a Cibil score of 760 and above will be offered the lowest rate of 8.35 per cent," a bank official told PTI.
On a home loan of Rs 50 lakh, the 70 bps reduction will translate into a saving Rs 2,496 a month and around Rs 9 lakh for a 30-year loan.
The bank's one-year MCLR, to which all home loans are linked to is also at 8.35 per cent. SBI's one year MCLR is currently at 8 per cent.
The official said the highest home loan rate would be at 9.35 per cent. The new rates would be applicable to all loans sanctioned with effective from January 7.
He said the new rate will be floating and will change with the next review in the MCLR after one year. BoB's current base rate is 9.60 per cent.
Home loan borrowers of other banks or housing finance companies can also shift to BoB's reduced rate of interest but the bank is yet to decide on the loan switching fee, he said.
The bank's interest rate on car loans and mortgage loans also starts from 8.85 per cent and 10.35 per cent.
Meanwhile, another state-run lender Bank of Maharashtra also cut its MCLR by 30 bps effective January 7. It's one year MCLR is set at 8.95 per cent.