- Union Bank cuts interest rates on home loans before Diwali
- People with more than 800 credit score will get the benefit of the new scheme
- Valid on transfer of balance, to apply for new loan from October 27
Customers who apply for a new loan or transfer the loan will get the benefit. According to the bank’s MD and CEO Rajkiran Rai, the bank is giving loans at the rate of 6.4 percent to customers with more than 800 credit scores. This is being offered because of the low cost of deposits as the interest rates are currently low. Because of this, the bank can charge interest rates even lower.
According to the bank, the home loan falls in the low risk category. The bank is also offering home loans at a lower margin of 6.40 per cent as the default rate among top rated customers is very low. Notably, there has been a lot of competition in the home loan segment for quite some time now. Union Bank has not only reduced rates but has also partnered with big builders. Apart from launching new channels for those who wish to inquire about loans, the bank has also introduced missed call banking.
Home loans are now linked to the repo rate of RBI. So that there is no huge reduction or additional burden on the consumers in interest rates. RBI has also allowed banks to extend the loan tenure instead of increasing the EMI amount when interest rates are increased. Bond yields are rising, but there is fierce competition among banks to attract customers during the festive season.
Home loan business is very safe for banks. It has a low default rate. Even if someone defaults, it is not very difficult for the bank to withdraw his money. The second wave of Corona has seen a boom in real estate. Banks are also benefiting from this. People are buying it because the house is relatively cheap. At the same time, banks are also trying to attract customers by keeping interest rates low. It is worth noting that even a few days ago, most banks had cut interest rates. After Union Bank, other banks can also cut interest rates.