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Bank of Baroda, the country’s second largest lender, on Tuesday did away with differential rates for home loan borrowers. It is to now charge 10.25 per cent, its base rate for all home loans, irrespective of the tenor and amount of the loan. It’s the first bank to do so.
Most banks charge different interest rates for home loans up to Rs 30 lakh and for those above Rs 30 lakh. Ranjan Dhawan, executive director, BoB, said they wanted to raise the average size of home loans.
State Bank of India, the largest lender, has the lowest home loan rates in the country. It charges 9.95 per cent for those below Rs 30 lakh and 10.10 per cent above Rs 30 lakh. It also has the largest share in the home loan market.
Dhawan said BoB planned to grow its lending by 18-19 per cent this year, a little above the sector average. He said interest rates on high value deposits had come down in the past month, enabling the government-owned lender to have lowered the rates in home loans.
“There are no conversion charges for existing customers to get the benefit of the reduced rate,” the bank added.
SBI, however, charges conversion fees to existing borrowers if they want to shift rates. An earlier customer’s rate changes only if the bank changes its base rate. The conversion fee is one per cent of the unpaid loan amount.
As of March, Bank of Baroda had a home loan portfolio of Rs 16,045 crore, which had grown 13.5 per cent year on year.
