Home Loan Rates in India: Public vs Private Sector Banks

Home loan interest rates in India range from 7.35% to 15% across lenders. Public-sector banks offer the most affordable entry-level rates, with Bank of Maharashtra, Union Bank, and Bank of India starting at 7.35%. Private-sector banks quote higher starting rates and wider ranges, with Kotak Mahindra Bank and HDFC Bank offering rates of 7.90% and 7.99%, respectively. The rates can differ based on borrower profile, credit score, income bracket, and internal risk grading.

Home loan interest rates in India range from 7.35% to 15% across various lenders, with significant variations based on the type of lender and borrower profile. Public-sector banks offer the most affordable entry-level rates, with Bank of Maharashtra, Union Bank, and Bank of India starting at 7.35% [1]. Private-sector banks generally quote higher starting rates and wider ranges, with Kotak Mahindra Bank and HDFC Bank offering rates of 7.90% and 7.99%, respectively [1].

The interest rates can differ significantly based on several factors, including the borrower's credit score, income bracket, and internal risk grading. For instance, a high credit score can lead to a lower interest rate, while a lower credit score may result in a higher rate. Similarly, borrowers with stable and high incomes are often offered lower interest rates compared to those with irregular or insufficient income [1].

It is essential for prospective borrowers to compare interest rates offered by multiple lenders before making a loan application. Even a slight difference in the interest rate can lead to a significant difference in the total interest cost over the loan tenure. Additionally, the type of home loan interest rate chosen—whether fixed, floating, or hybrid—also impacts the overall cost and repayment schedule [1].

The Reserve Bank of India (RBI) influences home loan interest rates through its repo rate, which serves as an external benchmark for floating rate home loans. Changes in the repo rate can affect home loan interest rates linked to internal and external benchmarks, with or without a time lag [1].

In conclusion, understanding the factors that influence home loan interest rates is crucial for borrowers to make informed decisions. Prospective home loan applicants should carefully evaluate their financial profile and compare offers from different lenders to secure the most favorable interest rates.

References:
[1] Paisabazaar. (2025). Current Home Loan Interest Rates Offered by Partner Banks & HFCs – July 2025. Retrieved from https://www.paisabazaar.com/home-loan/interest-rates/