Home loan equated monthly installments (EMIs) are coming down since the Reserve Bank of India started its repo rate reduction cycle since January 2014 when it was at 8 per cent.
The Reserve Bank has announced successive repo rate cuts since January 2015 bringing down the rate from 7.75 per cent to 6.5 per cent in its latest credit policy announced on April 5. This he central bank has also hinted at further rate cuts depending on monsoon. This has sent a signal to lender to lower interest rates on loans.
So how much would your EMI come down if you were a SBI floating rate home loan borrower? The net impact of the loan rate cuts by banks could be huge. To give you an idea of how much you would save, we took the country’s largest bank, State Bank of India, as an example, we did some quick calculations to understand the impact.
According to calculations done by Paisabazaar.com, between January 2015 and now, the equated monthly installment of an SBI borrower who availed Rs 50 lakh loan for 20 years would come down by Rs 1808, and net saving over the entire period of loan would be Rs 4,33,837.
SBI’s home loan rate has come down from 9.85 per cent in January 2015 to 9.45 in April 2016. The bank had reduced interest rate to 9.7 per cent in July 2015.
For a Rs 1 crore loan on the same duration the overall saving would be Rs 8,67,674 with EMI coming down by Rs 3,615.
How rate cut will impact an SBI borrower