Interest Rates That Affect Your Home Loan

The three rates namely, MCLR Rate, Base Rate and BPLR Rate are immensely used by both private and public sector to fix the pricing of their loans. But recently the government has brought some changes related to this. Home loan borrowers have to switch from base rate to MCLR rate from April 2016 since the introduction of MCLR rates that brings transparency in loan pricing and processing. These home loan interest rates are fixed by the government to help banks and NBFCs to set their loan prices.

These rates are used as benchmark rates for the lenders below which they cannot lend any loan to the prospective buyers. These rates give a clear indication that no banks can lend below this rate. In short, these set rates are a clear cap on lending. Among the three rates, the Benchmark Prime Lending rate allows creditworthy customers an opportunity to avail loans at lower rate of interest. If you are a customer who is looking to avail at these rates, you need to talk to your bank online or by visiting the branch. Most of these banks have clearly set their policies related to these rates which may not allow them to change the interest rates further before seeking the assistance from the RBI.

One should have a look at these rates before opting for any loans as their purchase decision may influence their savings by taking a wrong decision and choosing a wrong lender.