Cheaper Home Loans: PNB And Allahabad Bank To Link Loans With Repo Rate

New Delhi: Home loans continue to be become cheaper in the country with Punjab National Bank (PNB) and Allahabad Bank now linking retail loans with the Reserve Bank of India's Repo Rate.

Banks have been offering home loans based on Marginal Cost of Fund based Lending Rates (MCLR) while loans based on Repo Rate are usually cheaper.    

PNB has now introduced PNB Advantage, a retail lending scheme under which the loans are linked with Repo Rate. 

"In the new schemes rate of interest will be 0.25% less than the existing applicable rates based on MCLR. The new rates will vary from 8.25% to 8.35% for housing loan borrowers and 8.65% for car loan borrowers," PNB said in a statement.

The existing borrowers of PNB will have an option to move to new Repo Rate linked loans with minimal charges, the bank said.

Allahabad Bank has also started benchmarking its loans of up to Rs 75 lakh with external benchmark linked rates (EBLR) which will include Repo Rate as one of its constituents.

A host of other banks in the country have also started linking their loan offerings with Repo Rate, bringing down the interest rate for the borrowers.