The Reserve Bank of India in its last policy review kept the policy rate unchanged at 6.25 per cent. Although this move is not likely to make any difference to the lending rates, but the factors which can help in doing so are the recent demonetisation exercise as well as decrease in inflation. Moreover, easy liquidity and an increased bank deposit base will help in bringing down bond yields, which may bring cheers to customers by providing them lower interest rates.
Recently, many banks have already slashed their MCLR rates and brought the home loan rate to much lower level. The public sector bank State Bank of India on Monday also made its home loan cheaper for new customers. For up to Rs 30 lakh loans, SBI slashed the interest rate by 25 basis points to 8.35 per cent. Similarly, some other banks too have lowered their floating rates by certain basis points recently. This reduction will bring down the EMI up to a certain level, which will help customers buy a home at a cheaper cost.
“Home loan rate cuts benefit fresh borrowers by reducing their total interest cost. For example, with SBI’s latest 25 basis points rate cut for home loans under Rs 30 lakh, a new home loan borrower availing a Rs 25 lakh home loan for 20 years will save around Rs 95,000 over the entire tenure. However, the rate cut benefits will not just be limited to new borrowers. As all bank loans are based on banks’ MCLR rates and have to be reset at least once in a year, even existing borrowers will get benefited as and when their interest rate are reset. Borrowers with home loans from NBFCs or from banks with high MCLR rates should consider transferring their existing home loans to banks with lower MCLR rates,” says Naveen Kukreja – CEO & Co-founder, Paisabazaar.com.
Here are few examples of banks which have reduced their rates recently and the estimated EMIs: