SBI announces cheaper home loans

After the Reserve Bank of India prescribed new system to improve transmission of monetary policy that is Instead of one benchmark rate, banks would indicate at least five benchmark rates varying according to tenures called Marginal Cost of funds based Lending Rates (MCLR), home loans  from the country’s largest lender, State Bank of India are set to be cheaper by 10 basis points.

Under the Marginal Cost of Funds based lending Rate (MCLR) regime, banks would quote rate starting with a rate for overnight tenor, one month, three month, six months and one year buckets. Banks can give more rates if they wish.

SBI’s benchmark rate would range between 8.85% (for overnight) to 9.35% (for three years).

Presently, SBI offers home loan at 9.55% (base rate of 9.3% plus 25 basis point premium for home loan). Under revised guidelines, it could be with MCLR for one year – 9.2% plus 25 basis point premium makes it 9.45 basis points for home loans sanctioned from April one. “Their would be savings of Rs 600 in Equated Monthly Installment (EMI) on one year loan,” said Anshula Kant, the Chief financial Officer & Deputy Managing Director, SBI.