Bank of Baroda cut interest rates on home loans, but there’s a catch; details here

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Bank of Baroda Home Loans: Public lender Bank of Baroda has cut interest rates on its home loans, the bank said on Friday, April 22, a percent a year from a previous 6.75 percent a year. However, this is only for a limited period of time, the Bank of Baroda said in a press release.

“The Bank of Baroda (Bank), one of India’s leading public sector banks, announced today that it has reduced interest rates on home loans from 6.75 percent pa to 6.50 percent pa for a limited period. This special rate is valid until June 30, 2022,” the press release said. Bank of Baroda borrowers also receive a waiver of processing fees. “In addition, the bank has announced a 100 percent waiver of processing fees during this period. As a result, the Bank of Baroda continues to offer one of the lowest and most competitive home loan rates in the industry,” it said.

The new rate, which starts at 6.50 percent per annum, is available to customers applying for new home loans as well as balance transfers. This special rate applies to all loan amounts and is linked to a borrower’s credit profile, the public sector lender said.

Interestingly, the Bank of Baroda’s rate cut on home loans came days after the bank announced a 0.05 percent increase in its MCLR, or marginal cost of fund-based lending rates, effective April 12 this year. Bank of Baroda Home Loans are linked to an external benchmark, which is the RBI’s policy repo rate.

“One day before the Reserve Bank of India (RBI) monetary policy review, the Bank of Baroda announced that it has increased its marginal cost-based lending rate (MCLR) by 5 basis points effective June 7, 2018. Bank of Baroda is the latest lender to hike rates in recent days,” the bank had previously said.

Speaking of the reduction in home loan interest rates, HT Solanki, General Manager – Mortgages & Other Retail Assets, BOB said: “We have seen a significant pick-up in home sales in recent months and are pleased to extend the good times for homebuyers with the launch of a special time-limited interest rate offer of 6.50 percent along with zero processing fees. We expect the momentum to continue as customers want to make the most of this very attractive offer to buy their dream home.”

Bank of Baroda’s home loan portfolio increased 6.57 percent year-on-year to Rs.76,898 crore by the end of December 2021. In addition, gross retail loan portfolio had increased by 11.13 per cent to Rs.1,28,960 crore as of December 2021.

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