After Prime Minister Narendra Modi’s directive to banks on New Year’s address to act in “public interest” by focusing more on aiding the poor, lower middle class, middle class and senior citizens, several banks have announced steep cuts in borrowing rates. Some of the leading banks in the country, including State Bank of India, lowered their borrowing rates by up to 90 basis points.
Because of the banks decision to reduce interest rates, the home loans rates will fall down to their lowest point in last six years. The State Bank of India announced their decision to cut home rates from 9.10 per cent to 8.6 per cent. SBI on Sunday announced its decision to reduce one-year marginal cost of lending rate (MCLR) to 8% from 8.9%. Since, MCLR is the benchmark against which home loans are linked, the rates will see a huge downfall. A home loan of Rs 75 lakh which was earlier available at 9.1%, will now be available at 8.6%. Apart from SBI, several other banks including Union Bank of India and the Punjab National Bank have also decide to cut down rates.
Here is a list of banks and their new home loan interest rate:
SBI home loan interest rate: 8% from 8.9%
Union Bank home loan interest rate: 8.65% from 9.3%
IDBI Bank home loan interest rate: 9.15% from 9.3%
SBT home loan interest rate: 9.2% from 9.45%
IOB home loan interest rate: 9.15% from 9.5%
PNB home loan interest rate: 8.45% from 9.15%
The steep cut has been facilitated by the surge in deposits during the demonetisation period, which led to a substantial fall in cost of funds for lenders. Banks have mobilised an estimated Rs 14.9 lakh crore of deposits following demonetisation during the last 50 days.