Who could have imagined that home loan interest rates in the country have now reached 2.5%? If you take a loan of 27 lakh rupees and add Pradhan Mantri Awas Yojana (PMAY), tax exemption, then you are getting a loan at 2.5%. If you are not eligible for PMAY, then these rates can be up to 4%.
However, if there is no tax exemption, then you will get this interest rate of 6.80%. That is, home loan interest rates are at an all-time low in all three situations. It is at a level that never happened. This situation has been attributed to the ongoing pandemic.
How to get a home loan at 2.5 percent
This calculation is based on 7.50%, which was the interest rate in March. If we calculate the present 6.90 percent interest rate, then the rate of 2.9 will fall to you near 2.5%.
This has been proven that the home interest level is at its lowest level and has fallen to its present level. The home loan interest rate of 7.5 percent. This was the same rate of home loan in March this year. The years 2000, 2002, and 2020 have been compared. According to this, in the year 2000, the taxpayer used to pay interest of Rs 3.57 lakh on a home loan of 27 lakh. It increased to Rs 2.90 lakh in 2002 and now the interest amount is Rs 1.85 lakh.
Principal and Interest deduction in 2000
Similarly, in 2000, the principal amount on your total EMI was cut by 27,630 rupees in a year. In 2002, the principal was cut by Rs 38,694 but now it is cut by Rs 1.50 lakh. In the year 2000, you used to save tax of Rs 32,775. In 2002 it was Rs 53,550. Whereas now it has become Rs 108,150. In the year 2000, the rate of effective interest was 12 percent.
8.8 percent rate of Interest in 2002
In 2002 it was 8.8 percent while it is now 2.9 percent. This calculation is at 7.50 percent. If we calculate it at 6.95, then the interest rate rises to 2.50 percent. Actually, you get a benefit of Rs 230,156 as a CLSS subsidy. Whereas all discounts on interest are also available in the year. In this way, you may get many types of benefits that apply to home loans.
Rapid rate change between 2002 and 2004
Statistics show that between 23 December 2003 and 9 February 2004, the rate of interest on loans of Rs 2.99 lakh was 7.50 percent. Whereas the loan rate of 3 lakh and above was 7.50 percent. Similarly, between 10 February 2003 to 18 November 2004, the interest rate on loans of Rs 2.99 lakh was 7.75 percent and on loans above 3 lakhs, the rate was 7.25 percent. Between 19 November 2004 to 15 June 2005, the interest rate on loans of 9.99 lakhs was 7.75 percent while the interest rate on loans above 10 lakhs was 7.25 percent.
Interest rates were at a low level for some time from 2003 to 2005
Similarly, interest rates were at the lowest level from December 2003 to June 2005. Although it was only for some time. But in the last 15 years, capital provisioning has increased these rates. Current interest rates have reached the level of 2003 to 2005. Bank of Baroda chief economist Sameer Narang says that from October 1, banks introduced the External Benchmark Lending Rate (EBLR) for retail loans. Most bank rates are linked to the RBI repo rate. Recently, the repo rate decreased sharply due to which the interest rates of home loans also came down.
Interest rates are now linked to repo rates
Bank of Maharashtra MD & CEO A.S. Rajiv says that this situation has arisen due to market-linked interest rates. Union Bank MD RK Rai says that the fall in home loan interest rates is because the bank rates are linked to the repo rate. So, whenever the repo rate is cut, these rates come down. Recently, the RBI has sharply cut the repo rates.
The cost of funds of banks has come down
According to an SBI official, the cost of funds of our bank is currently at a low level. The net interest margin is quite high. SBI is, therefore, offering home loans at an interest rate of 6.95 percent. Interest margin refers to the interest charged on borrowings and interest paid on deposits. Banking sector experts say that due to principal payment, interest payment, and Pradhan Mantri Awas Yojana (PMAY), interest rates have come down. This is probably the lowest rate of interest ever in history.
2.67 Lakh facility on PMAY
If one does not avail PMAY facility, then this interest rate will increase slightly which will be at 4 percent. A subsidy of Rs 2.67 lakh is received on PMY anyway. As of March, home loan interest rates were only at 7.50 percent. However, for the time being there were home loan interest rates at 7.25 percent in 2004-05. Talking about the interest rates of major banks and NBFCs in the country, HDFC Limited, SBI, ICICI Bank are offering home loans at 6.95 percent. While Axis Bank is offering home loans at 7.75 percent, LIC Housing at 6.90 percent. Union Bank is offering a home loan at the lowest rate of 6.80. The interest rate of India Bulls Housing Finance is 8.99 percent while that of Can Fin is 8.80 percent.