The country’s largest lender State Bank of India (SBI) will slash the interest rate on home loans and the borrowers are expected to get the benefit of lower interest rates soon, said a media report.
SBI will make effective the cut in the interest rate on home loans from Saturday (10 August).
The bank’s home loan borrowers’ equated monthly installment (EMI) may come down, said a report in NDTV Profit.
On 7 August, SBI cut its benchmark lending rates by 15 basis points or 0.15 percentage point across all tenors, shortly after the Reserve Bank of India (RBI) slashed the repo rates by 35 basis points to 5.40 percent.
Representational image. Reuters
The repo rate is the rate at which the RBI lends to banks.
The lender said after its fourth cut in the marginal cost of funds-based lending rate (MCLR) for the year, home loans had become cheaper by 35 bps since 10 April.
SBI’s one-year MCLR will come down to 8.25 percent per annum from 8.40 percent earlier with effect from 10 August, SBI said in a statement.
“SBI has effected the full transmission of repo rate cuts by the RBI and has passed on the benefit of the repo rate reduction by 85 bps during the current financial year to its CC/OD (cash credit and overdraft) customers with limits above 100,000 rupees,” SBI said.
On 6 August, private lender HDFC Bank had cut MCLR by 10 basis points across all tenors a day ahead of the RBI reduced the repo rate.
Accordingly, the private bank’s one-year MCLR stands at at 8.6 percent and the new lending rates came into effect from 7 August.
On 7 August, it was indicated that home, auto and other loans would become cheaper after the RBI cut interest rate by an unconventional 35 basis points — the fourth successive reduction — to a nine-year low.
The RBI, which has lowered interest rates by 1.1 percent this year, maintained its “accommodative” stance that meant an increase is off the table.