Bank of India lowers home loan rates by 25 bps for new, existing customers

State-owned lender Bank of India has reduced interest rates on the home loan it offers by 25 basis points (bps) for new as well as existing customers with effect from April 15, according to a statement by the bank.

With this revision, the home loan rate stands reduced to 7.90% p.a. based on CIBIL score. The lender has also reduced interest rates by 25 bps across select existing retail loan products, including vehicle loan, personal loan, loan against property, education loan and Star reverse mortgage loan.

The announcement comes just days after the Reserve Bank of India (RBI) slashed repo rate by 25 bps in its April monetary policy, in an effort to further support growth. The April MPC had also decided to change the stance to ‘accommodative’ from ‘neutral’.

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This is the second time in a row that the central bank has cut repo rate to aid growth amid global uncertainties. During the February policy, the RBI had cut repo rate for the first time in five years. The repo rate is the interest rate at which the central bank lends to other banks.

All floating-rate retail loans, including home loans, sanctioned after October 1, 2019, are linked to external benchmarks, which is the repo rate in the case of most banks. So, these lenders will have to transmit the entire 25-bps reduction to their existing home loan borrowers. Factoring in the 25-bps cut in February, the cumulative 50-bps reduction is bound to result in substantial savings for those who have availed of home loans.