Home Loan Rates At A New Low: Best Time To Buy
The state bank of India and the Kotak Mahindra bank have cut the interest rate on home loans. This comes as a huge development as the SBI is now offering home loans of up to 75 lakhs rupees at 6.7 % for salaried women borrowers, making this rate the cheapest ever in the history to be offered by the SBI. The SBI will also continue to waive processing fees on all home loan applications.
After this news, the Kotak Mahindra bank also came to the field offering its lowest ever interest rate at starting at 6.65 percent for new purchases as well as balance transfers.
Listed below are the lowest home loan interest rates offered by various banks:
Kotak Mahindra Bank 6.65
State Bank of India 6.70
Axis Bank 6.75
ICICI Bank 6.80
HDFC bank 6.80
The offered rates are subject to change based on your loan amount, age, duration of the loan, and other terms and conditions.
Many questions come to mind due to the current scenario as to whether this is the right time to invest or if this cut in the home loan rates is just a short-term strategy to boost investment, or is there any long term benefit associated with this move.
Why are the home loan interest rates so low?
Changing Trends: Due to the current pandemic outbreak, people have embraced the WFH culture. With kids schooling from home and adults working from home, many people have realized the need for a permanent house and a better standard of living.
Home loan buyers are better in terms of credit and risk-adjusted factors. There is also stiff competition among the banks. Home loan buyers are better credit than state governments.
Is the investment safe?
Bankers today are taking a call on the portfolio and home loan is the most secure portfolio. With the new low-interest rate, buyers benefit and in turn economy benefits, thus it is a win-win situation. A home loan would give a boost to the construction industry also (Paints, tiles, construction workers.)
Is this the best time to buy?
Undoubtedly, this best time to invest in the real estate market. With needs for a better standard of living and WFH culture, affordable housing is the need of the hour. With a cut in the interest rate, buyers need to make a move because this phase is not going to last more than six months to one year.
For Existing buyers:
If you have opted for a floating interest rate, your interest rates will automatically come down due to market trends, but if you have borrowed on a fixed interest rate, you will have to take a call basis factors like the fees you pay the new back etc, which should be less than the benefit you reap on the new interest rate .
The new buyers can opt for a fixed interest rate in the current scenario as it is on an all time low. The home loan interest rate is not likely to drop below this, hence going for a fixed rate can be a wise choice.
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