Private Banks Likely to Slash Down the Interest Rates Following SBI’s Suit
May 19, 2017 Home Loan
The home loan rates in India are now at the lowest it has been in past eight years. State bank of India, the country’s biggest bank, has announced the reduction in loan rate by 90 basis points. The current home loan rate is 8 percent reduced from 8.9 percent. it is expected that the private banks will follow the same route and reduce their loan rates. Since the reduction, the interest rates the marginal cost lending rate has been affected too. The MCLR lending rate has reduced 7.75 percent from 8.65 percent.
The rate of SBI’s one year home loan is 8 percent reduced from 8.9 percent. For two years it is 8.1 percent and for three years it is 8.15 percent.
Not only home loan rates, it is expected that the auto loan rates, as well as other consumer rates, will go down as well.
Women home loan buyers can borrow the loan at the rate of 8.20 percent while other can borrow it for 8.25 percent.
The Union bank of India has reduced the MCLR by 65 basis points and provided relief to the borrowers.
Prime Minister Modi on his speech on 31st December said that the demonetization as increased the inflow of cash which has led to the significant reduction in the loan rates. The new loan rates are applicable from 1st January 2017.
The IDBI bank and State bank of Travancore have also reduced the loan rates. The loan lender from IDBI bank for three years will now have reduced loan rate of 9.30 percent while the six month loan has been reduced to 8.90 percent. IDBI bank will now charge 9.15 percent for one year loan.
It is estimated that the banks have amassed Rs 14.9 lakh crore in their vaults due to demonetisation. To increase the credit growth and revive the private investments, the banks were highly expected to reduce the lending rates.
Reserve bank of India will welcome the lower interest rates by the banks. RBI has already cut the policy rate by 175 basis points or 1.75 percent since the start of 2015 but has felt that the private banks were too slow in reducing their lending rates.
To know further how the reduced rates will affect the monthly EMI, let us consider a loan of Rs 20 lakhs taken for 20 years. The monthly EMI with the reduced rates come out to be around Rs 825 per month. Thereby, saving around Rs 10,025 per year in the interest.
The rate of SBI’s one year home loan is 8 percent reduced from 8.9 percent. For two years it is 8.1 percent and for three years it is 8.15 percent.
Not only home loan rates, it is expected that the auto loan rates, as well as other consumer rates, will go down as well.
Women home loan buyers can borrow the loan at the rate of 8.20 percent while other can borrow it for 8.25 percent.
The Union bank of India has reduced the MCLR by 65 basis points and provided relief to the borrowers.
Prime Minister Modi on his speech on 31st December said that the demonetization as increased the inflow of cash which has led to the significant reduction in the loan rates. The new loan rates are applicable from 1st January 2017.
The IDBI bank and State bank of Travancore have also reduced the loan rates. The loan lender from IDBI bank for three years will now have reduced loan rate of 9.30 percent while the six month loan has been reduced to 8.90 percent. IDBI bank will now charge 9.15 percent for one year loan.
It is estimated that the banks have amassed Rs 14.9 lakh crore in their vaults due to demonetisation. To increase the credit growth and revive the private investments, the banks were highly expected to reduce the lending rates.
Reserve bank of India will welcome the lower interest rates by the banks. RBI has already cut the policy rate by 175 basis points or 1.75 percent since the start of 2015 but has felt that the private banks were too slow in reducing their lending rates.
To know further how the reduced rates will affect the monthly EMI, let us consider a loan of Rs 20 lakhs taken for 20 years. The monthly EMI with the reduced rates come out to be around Rs 825 per month. Thereby, saving around Rs 10,025 per year in the interest.
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