Union Bank mortgage loans at lowest rate of 6.4% on record

MUMBAI: Union Bank of India on Tuesday announced a cut in the interest rates on its mortgage loans, which will now start at 6.4%, the lowest rate in the industry. The reduced rate will take effect on October 27. The new rates will apply to customers who apply for new loans or to those who wish to transfer their existing loans, including balance transfers. This is the lowest mortgage rate ever offered by a traditional bank.
“We offer 6.4% for the best category of clients with credit scores above 800. The low cost deposits provide us with a cushion to reduce rates even further,” said Rajkiran Rai, Managing Director and CEO of the Union Bank of India. . He added that the bank is working with low margins as defaults among top-rated clients are unlikely and the RBI also assigns a lower risk weight to home loans, which allows banks to lend more with less capital.
“Home loans have become extremely competitive, it’s not just about rates. We have partnered with most of the major builders for rapid loan recovery. We have introduced several lead generation channels, including the website and the missed call bank, ”said Rai.
As mortgage loans are now tied to the RBI repo rate, customers do not run the risk of a sharp and sudden rise in rates. The RBI also allowed banks to extend the tenure instead of increasing EMIs if its repo rate increased.
Even though bond yields have started to tighten, the holiday season saw a mortgage rate war between banks. With anemic credit growth of 7% this year so far, banks are looking to increase their portfolios by favoring home loans, which are considered low risk advances.

Leave a Reply

Your email address will not be published.