SBI home loan EMIs to drop as bank cuts MCLR twice in a month

The State Bank of India or SBI has announced a further cut in its lending rate, making IMEs on home loans and others tied to its marginal cost of funds based on the lending rate or MCLR cheaper. SBI reduced the MCLR by 25 basis points across all tenors, effective June 10, 2020. This is the second reduction in the bank’s MCLR in a month.

The one-year MCLR, against which home loans are typically compared, drops to 7% per annum from 7.25%. After the last reduction, IMEs on qualifying home loan accounts linked to his MCLR, for example, 30 years old, ??25 lakh loans, will become cheaper by Rs. 421.

SBI also lowered its key rate by 75 basis points, from 8.15% to 7.40%, with effect from June 10, 2020.

If you are already a mortgage borrower from SBI, the latest 25 basis point cut in MCLR, however, will not immediately lower the interest rate on your mortgage. If your SBI variable rate mortgage is linked to the MCLR, you will have a revaluation clause and from that date the new rates will become applicable.

In addition, SBI has also passed on the entire 40 basis point repo rate cut (announced by the Reserve Bank of India on May 22, 2020) to its borrowers whose loans are tied to the external benchmark rate. linked to loans (EBR) as well as loans linked to pensions. (RLLR), from July 1, 2020.

Consequently, SBI’s external benchmark linked lending rate will be reduced to 6.65% per annum, down from 7.05% as of July 1, 2020. Similarly, SBI’s pension linked lending rate (RLLR) will be reduced to 6.25% per year against 6.65% per year from June 1, 2020..

Home loans linked to EBR / RLLR will be cheaper by around Rs. 660, for a 30-year loan of Rs. 25 lakh, the SBI said.

Last month, SBI announced a 5 basis point cut in savings deposit interest rates to 2.70%. This is the second cut by SBI in its interest rates on savings bank deposits this fiscal year.

In April, the bank cut savings bank deposit rates by 25 basis points (bps) to 2.75%.

About 21.8% of SBI’s retail borrowers took advantage of the bank’s three-month moratorium on March-May repayments, SBI said earlier this month.

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