As per the new rule passed by the Central bank on September 4, 2019, on revising home loan rates. RBI proposed banks to link the new home loan interest rates, the rate at which banks lend for retail loans including home loans to the external benchmarks from October 1. External benchmark can be the repo rate (the rate at which RBI lends money to individual banks), or three-month or six-month treasury bills. It could also be any other benchmark published by Financial Benchmarks India, which administers such rates. This initiative will benefit borrowers since they would be paying less on their overall home loan interest rate at a reduced EMI. In some cases, the new home loan interest rate may even be reduced to 30 basis points. 

SBI Home Loans Interest Rates are Reduced from 8.35% to 8.25%

State Bank of India, India’s largest commercial bank announced that 10 basis points would be cut from SBI home loans interest rates. A basis point is equal to 0.01 percentage points. A one-year marginal cost of funds-based lending rate (MCLR), will now stand at 8.15 per cent instead of 8.25 per cent earlier. As a result, SBI home loan interest rates are changed from 8.35-8.90 % to 8.25 % to 8.80 % for home loans up to Rs 75/- Lakhs.

Are you thinking about how this will benefit the home buyer? For example, if a buyer has opted for SBI home loan interest rate of Rs 50 lakh over a 15-year tenure. Then the EMI will now start at Rs 48,507 instead of Rs 48,798 (at 8.35 per cent interest). Ok! that may not be such a vast difference, but when calculated on the overall payable interest, it will approximately be at Rs 52,380 /-. All these benefits will be availed as per the borrower's profile. 

While lenders have the freedom to the extent, they charge over the external benchmark fixed by the RBI to calculate the final home loan interest rate. The central bank stated that the interest rate could be spread only if the credit appraisal of the borrower encounters a substantial change. The interest rate following the external benchmark will have to be reset at least once in 3 months. For non-salaried, SBI will charge an additional of 15 basis points, and for the people of higher Risk Grade, it will be further added to 10 basis points. 

Conclusion

Many speculations are arising with this big step of RBI, as the majority of people think this will bring a positive effect to the real estate sector. Some consider, this move to bring significant drastic changes in EMIs since the financial situations are always volatile. As per the new rule, any increase in the repo rate will give rise to the EMIs, increasing the burden on the borrowers.

It is expected that if there is a rise of 50 basis point in the repo rate, this could lead to a Rs 1,500 approx increase in monthly payments on a Rs 50 lakh loan payable over 15 years. A 100 basis point rise could get hard on borrower’s pocket by as much as Rs 3,000 a month.

With home loans getting cheaper, this is the best time to own your dream home. Browse PropertyAdviser.in to obtain all accurate information on the latest properties for sale in Hyderabad with home loans information to reduce your home search and find the best affordable house for your family.

By Govi