With banks slashing the marginal cost of funds-based lending rate (MCLR), now buying your dream home will soon be a reality. Since Sunday, various banks have announced the MCLR rate cut as they are flooded with liquidity after the demonetization drive ended on December 31, 2016. Starting with India’s largest bank, State Bank of India (SBI) on Sunday reduced its MCLR rates by 0.90% points across all tenure loans bringing down the effective home loan rates to 8.60% from 9.10% per annum (p.a.). The new home-loan rates are the lowest in the last six years.
Following SBI, other banks too revised the MCLR rates. From now onwards, you can save up to Rs 75 lakh on home loans for which the interest rates will be 8.60% p.a. Additionally, for other loans, rates would be as low as 8.65% p.a. which was earlier 8.90% p.a. In addition to this, SBI has also revived a teaser-rate loan where for the first two years, the loans will be available at 8.50% p.a. and at a floating rate in subsequent years.
Considering 0.50 % is reduced across all banks for a new borrower, the amount of money he could save in such a case is explained by an example. As per Rishi Mehra, founder, Deal4loans, for a loan amount of Rs 30 lakh entailing a tenure of 20 years along with the new interest rate i.e. 8.60%, the EMI will be Rs 26,225 and the total interest will come up to Rs 32,93,972.
Earlier, the interest rate was 9.10% for the same tenure with the same amount. This means, the EMI was Rs 27,185 and the total interest Rs 35,24,405. This means, the savings will be of over Rs 2.5 lakh for over 20-years tenure and monthly saving of Rs 960 per month.
“This will ensure a lot more demand in the sector and we are already seeing 300% increase in traffic for home loans from yesterday,” Mehra said.