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Canara Bank Raises Interest Rates on Home Loans; the bank offers lower rates for women, low-risk borrowers

By on August 6, 2022 0

Canara Bank Raises Interest Rates on Home Loans; the bank offers lower rates for women and low-risk borrowers

Photo: ET now digital

Canara Bank raised repo rates linked to the lending rate to 8.30% from 7.80% earlier, after the latest repo rate hike from the Reserve Bank of India. The new rate will take effect on August 7, 2022. The increase comes a day after the central bank, at its monetary policy committee meeting, decided to raise repo rates by another 50 basis points, a third increase in the last 93 days.

Canara Bank will charge an interest rate of 8.05% for female home loan borrowers while the rate for other borrowers will be 8.10%, according to the bank’s website.

For those with lower credit ratings, considered high-risk borrowers by banks, a credit risk premium of 0.05-2% will be charged on top of the repo rate linked to the lending rate. The effective mortgage lending rate for high-risk borrowers will be between 8.35% and 10.30% from tomorrow.

In addition, a 25 basis point concession will be offered to low-risk borrowers until September 30, 2022, according to the bank’s website.

“The concession will be applicable only to low-risk borrowers for whom new home loans (all variants) have been sanctioned and disbursed during the period, i.e. 01.07.2022 to 30.09.2022.”

A concession of 5 basis points will be offered to female borrowers.

The RBI raised the repo rate by 50 basis points or 0.5% on Friday, bringing the overall increase to 1.4% over the past 93 days. Depositors, impacted by high inflation and low rates, have reason to rejoice due to the rising rate momentum. The era of low multi-year fixed deposit rates is over and FD investors anticipate good returns on the horizon. The recent increase of 50 basis points, say from 6.5% to 7%, results in an additional interest payment of Rs 3,436 on an FD of Rs 1 lakh with a maturity period of 5 years.