Fixed Rate for longer term Home Loans from SBI

If you are wondering whether With the new benchmark rates being reviewed every month, should new home loan borrowers keep checking rates or will the annual reset take care of everything, Arundhati Bhattacharya, Chairman of country’s largest lender State Bank of India explains it all here.

The Base Rate is reviewed quarterly and banks cannot lend below it. The Marginal Cost of Lending Rate (MCLR) which is a rate derived out of incremental cost of deposits, and is reviewed every month, are apples and oranges. Borrowers will have to keep checking the rates. They’ll have to understand what the MCLR is and identify their risk appetite.

If they believe that it is better to know for sure what their future EMIs will be, then they may opt to fix their rate for a longer tenure. A borrower can also choose MCLr, which is a floating rate; but for optimum management, the consumer will have to keep a track of the oscillating rates.