Pricing of housing loan by a commercial bank may follow the following steps in a logical sequence: (a)…

When a commercial bank prices a retail housing loan, the logical sequence of steps is: (d) Conduct a thorough credit assessment (credit score, income, LTV) of the applicant; (c) apply the bank's internal benchmark Marginal Cost of Funds based Lending Rate (MCLR) or external benchmark rate for the relevant tenor; (b) specify the credit risk premium and business spread over the benchmark rate; (a) determine the final competitive interest rate; and (e) quote the loan offer to the prospective borrower (d, c, b, a, e).