India’s largest lender the State Bank of India (SBI) has announced that it has reduced its marginal cost of fund based lending rate (MCLR) by five bps across all tenors, bringing down the home loan interest rate.
With this move, one year MCLR has come down from 8.50 percent p.a. to 8.45 percent p.a. As a result, interest rates on all loans linked to MCLR stand reduced by five basis points (bps) with effect from May 10, 2019, the bank said in a statement.
This is the second rate cut by the bank in last one month. Bank had reduced its MCLR by five bps, after the monetary policy review in April. SBI had also reduced the interest rate by 10 bps on home loans up to Rs 30 lakh.
With this MCLR cut, the reduction in home loan rates since April 10, 2019 is 15 bps.
Both the new and the existing home loan borrowers stand to benefit from this announcement by the bank. If a borrower has a 12-month period, the home loan (and hence the EMI’s (Equated Monthly Installment) will be reset at the end of 12 months. Those whose reset date is in May or in the next few months stand to gain in terms of lower EMI’s.