In a significant move to boost housing affordability, LIC Housing Finance has announced a substantial reduction in its home loan interest rates. This decision offers fresh relief to prospective homebuyers across India, with the starting rate for new loans now set at an attractive 7.15%.
Revised Rate Structure Linked to Creditworthiness
The lender has meticulously designed a new rate structure that directly rewards borrowers with a strong credit history. The revised rates are intricately linked to the applicant's CIBIL score, a three-digit numeric summary that reflects an individual's creditworthiness and repayment capability.
Borrowers with a CIBIL score of 825 or above are eligible for the most competitive rate of 7.15% on loan amounts up to Rs 5 crore. This strategic move is aimed at incentivizing financial discipline among customers. The new pricing is applicable for both fresh home loan applications and requests for balance transfers from other banks.
Detailed Breakdown of New Interest Rates
The interest rate slab varies based on the CIBIL score and the loan amount. Here is a simplified overview of the key brackets:
- CIBIL ≥ 825: Loans up to Rs 5 crore at 7.15%; above Rs 5 crore up to Rs 15 crore at 7.45%.
- CIBIL 800–824: Loans up to Rs 5 crore at 7.25%; above Rs 5 crore up to Rs 15 crore at 7.55%.
- CIBIL 775–799: Rates range from 7.35% to 7.65% across different loan slabs up to Rs 15 crore.
- CIBIL 750–774: Rates range from 7.45% to 7.75%.
- Lower score brackets (600-699 and below 600) attract higher interest rates, going up to 10.00%, emphasizing the premium on a good credit profile.
Additionally, special rates are offered for loans in the Rs 35 lakh to Rs 2 crore bracket for scores between 150 and 200, starting at 7.65%.
Gaining a Competitive Edge in the Market
This rate revision positions LIC Housing Finance favorably against other major players in the market. Compared to the State Bank of India (SBI), which currently offers home loans starting at 7.25%, LIC Housing Finance now provides a slightly lower entry-level rate for borrowers with excellent credit scores.
SBI's rates, effective from December 15, range from 7.25% to 8.45% for standard home loans, with other products like 'Maxgain' and 'Loan Against Property' priced higher. LIC Housing Finance's targeted reduction for high-score customers could attract a segment of credit-conscious, prime borrowers looking for the best deal.
The initiative underscores a broader trend in retail lending where financial institutions are increasingly tailoring their products to individual risk profiles. By lowering the cost of borrowing for reliable customers, LIC Housing Finance not only makes homeownership more accessible but also encourages maintaining a healthy credit score among the public.
