Banks to Reduce the Home Loan Interest Rates
May 17, 2019 Home Loan
The summer has brought joy for the potential homebuyers. All the major banks in the country are now reducing the home loan interest rates, making it easier for the homebuyers to invest in the property.
The move came into effect after the Reserve Bank of India reduced their repo rate by 6 percent. The Central Bank of India has reduced the repo rates by 50 bps in the last four months urging other banks to reduce their lending rates.
MCLR is the benchmark rates that lending rate at which the banks in India price their loans. The new lending benchmark came into effect last year in April, replacing the earlier base system rate.
India’s biggest bank, State Bank of India, has reduced their MCLR by 5 basis points. This is the second time in a month and that SBI has brought down the basis points bringing the interest rate to 8.45 percent per annum. For the home loan up to Rs 30 lacs, SBI has lowered the interest rates by 10 bps, between 8.60 and 8.90, which earlier was 8.70 and 8.90. These rates are effective since May 10th.
In April, IDBI bank reduced their lending rate by five bps. One year MCLR for IDBI is now 9 percent. While for six months, it is 8.60 percent and for two years it is 9.25 percent. The rates have been effective since April 12th.
Bank of Maharashtra has reduced their loan rates by 5 bps for one year or more, reducing it to 8.65 percent from 8.70 percent. The Indian Overseas Bank has decided to follow the State Bank of India’s suit and provide the same interest rates. The rates have been applicable since April.
The move came into effect after the Reserve Bank of India reduced their repo rate by 6 percent. The Central Bank of India has reduced the repo rates by 50 bps in the last four months urging other banks to reduce their lending rates.
MCLR is the benchmark rates that lending rate at which the banks in India price their loans. The new lending benchmark came into effect last year in April, replacing the earlier base system rate.
India’s biggest bank, State Bank of India, has reduced their MCLR by 5 basis points. This is the second time in a month and that SBI has brought down the basis points bringing the interest rate to 8.45 percent per annum. For the home loan up to Rs 30 lacs, SBI has lowered the interest rates by 10 bps, between 8.60 and 8.90, which earlier was 8.70 and 8.90. These rates are effective since May 10th.
In April, IDBI bank reduced their lending rate by five bps. One year MCLR for IDBI is now 9 percent. While for six months, it is 8.60 percent and for two years it is 9.25 percent. The rates have been effective since April 12th.
Bank of Maharashtra has reduced their loan rates by 5 bps for one year or more, reducing it to 8.65 percent from 8.70 percent. The Indian Overseas Bank has decided to follow the State Bank of India’s suit and provide the same interest rates. The rates have been applicable since April.
How will it affect the borrowers?
A lot of borrowers in the past have opted for a floating rate of interest since the prices are lower. Now they can also enjoy the benefit and apply for the fixed rate of interest. Kindly remember, that the borrower will have to personally visit the bank and submit the application to change the home loan interest rate from floating to a fixed rate of interest.
This will also mean that for the borrowers, the loan tenure will come down. The banks generally reduce the loan tenure rather than the monthly EMI. For example, the loan tenure for your home loan was 20 years earlier; it can now be 18 years. It helps the loan borrower to pay off the entire home loan in shorter tenure than otherwise.
This will also mean that for the borrowers, the loan tenure will come down. The banks generally reduce the loan tenure rather than the monthly EMI. For example, the loan tenure for your home loan was 20 years earlier; it can now be 18 years. It helps the loan borrower to pay off the entire home loan in shorter tenure than otherwise.
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