SBI Cuts Down the Interest Rates Making Home Loans Cheaper
Nov 21, 2019 Real Estate News
The biggest bank of the country, State Bank of India, has recently announced a further reduction in the basis points. The lender reduced the basis points by 5 in its Marginal Cost Lending Rate (MCLR) across tenors. This is the seventh reduction this year in the MCLR rates, thereby reducing the home loan lending rates to 8.05 percent. Back in October the bank also announced the repo rate- linked lending rates following the direction of Reserve Bank of India.
Other public and private sectors banks have followed the suite and have further reduced their MCLR rates. In October, HDFC reduced their floating rates by 10 bps. The new rates offered by the HDFC Bank range from 8.25 percent in the lowest bracket and 8.65 percent in the highest bracket.
Since December last year, the RBI has been on the rate reduction spree. The step taken by the RBI is supposed to encourage the buyers to get into the real estate sector, thereby boosting the real estate sector of the country. The buyer sentiment remains the same, and even after significant reductions in the home loan rates, the buyers are not showing interest in buying a house.
RBI has been reducing its repo rates every two months. However, since the banks only revise their price twice a year, the loan borrowers were not able to enjoy the benefits of repo rate reductions. For the uninitiated repo rate is the rate at which the RBI lends out the money to the banks. The RBI directed the public and private sector banks to link the repo rates to the interest rates so the home buyers can see the effect of the repo rate reduction instantly. The banks introduced their repo rate- linked lending rate that is directly linked to the repo rate offered by the RBI to the banks. Every time the repo rate changes the interest rate changes too. The banks have also reduced their MCLR rates further to make sure that the home buyers who opt for MCLR rates can enjoy the benefit of the lower repo rates.
The interest rates have been falling since RBI has directed the banks to follow the suite. The repo rate is at an all-time low in the last ten years. On October 4, 2019, the repo rate was lowered to 5.15 percent. It is expected that financial institutes and banks will further reduce their interest rates. The RBI governor, Shakitkanta Das has said that the banks have reduced their interest on fresh rupee loans by 29 bps so far as compared to the 75-bps reduction announced on August 7, 2019.
Other public and private sectors banks have followed the suite and have further reduced their MCLR rates. In October, HDFC reduced their floating rates by 10 bps. The new rates offered by the HDFC Bank range from 8.25 percent in the lowest bracket and 8.65 percent in the highest bracket.
Since December last year, the RBI has been on the rate reduction spree. The step taken by the RBI is supposed to encourage the buyers to get into the real estate sector, thereby boosting the real estate sector of the country. The buyer sentiment remains the same, and even after significant reductions in the home loan rates, the buyers are not showing interest in buying a house.
RBI has been reducing its repo rates every two months. However, since the banks only revise their price twice a year, the loan borrowers were not able to enjoy the benefits of repo rate reductions. For the uninitiated repo rate is the rate at which the RBI lends out the money to the banks. The RBI directed the public and private sector banks to link the repo rates to the interest rates so the home buyers can see the effect of the repo rate reduction instantly. The banks introduced their repo rate- linked lending rate that is directly linked to the repo rate offered by the RBI to the banks. Every time the repo rate changes the interest rate changes too. The banks have also reduced their MCLR rates further to make sure that the home buyers who opt for MCLR rates can enjoy the benefit of the lower repo rates.
The interest rates have been falling since RBI has directed the banks to follow the suite. The repo rate is at an all-time low in the last ten years. On October 4, 2019, the repo rate was lowered to 5.15 percent. It is expected that financial institutes and banks will further reduce their interest rates. The RBI governor, Shakitkanta Das has said that the banks have reduced their interest on fresh rupee loans by 29 bps so far as compared to the 75-bps reduction announced on August 7, 2019.
Looking for property portal?
Related Articles
-
Impact of RBI Holding or Increasing the Repo Rates
Sep 14, 2019 -
-
-
Is Investing all Your Money in Real Estate Good?
Sep 28, 2018
