The state-owned Bank of Baroda and financial services company HDFC Limited have cut interest rates on their home loans marginally. For home loans, Bank of Baroda was charging a spread of 300 basis points (bps) above the repo rate, which is 5.15 pct at present. The lowest interest on a home loan was, therefore 8.15 pct. However, it has brought down the spread by 15 bps. New home loan rates start at 8 pct. The new rates will come into effect from March 1.

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HDFC Limited has also revised its retail prime lending rate by 5 basis points (bps). Earlier, the lender had set the rate at 16.6 pct. The housing finance company has said that the change will be effective March 9. 2020. The benefits will be extended to all existing retail home loan customers. The lowest home loan rate for HDFC is now at 8 pct, according to its website.

The state-owned Bank of Baroda and financial services company HDFC Limited have cut interest rates on their home loans marginally. It had introduced long-term repo operations (LTRO) under which banks could receive cheaper long-term funds. It had also announced the relaxation of cash reserve ratio (CRR) requirements for home and auto loans and loans to Micro, Small & Medium Enterprises (MSME).

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The RBI had asked all banks to mandatorily link their new floating-rate retail loans to an external benchmark since October 1, 2019. The objective was to ensure effective RBI policy transmission and greater transparency.

The banks are supposed to reset their external benchmark-linked lending rates once in a quarter, as per the regime.