India’s largest lender State Bank of India has reduced its marginal cost of fund-based lending rate (MCLR) by 10-15 bps across various tenors, a move which will make home loans cheaper. The new rates came into effect from March 10 onwards.
The one-year MCLR has been cut by 10 bps to 7.75 per cent from 7.85 per cent earlier. Similarly, MCLR for the two year tenor, has been reduced to 7.95 per cent from 8.05 per cent. For three-year tenor rates have been cut to 8.05 per cent from 8.15 per cent.
MCLR rates effective from March 10, 2020
|
Tenor |
Existing MCLR (In %) |
Revised MCLR (In %) |
|
Over night |
7.6 |
7.45 |
|
One Month |
7.6 |
7.45 |
|
Three Month |
7.65 |
7.5 |
|
Six Month |
7.8 |
7.7 |
|
One Year |
7.85 |
7.75 |
|
Two Years |
8.05 |
7.95 |
|
Three Years |
8.15 |
8.05 |
However, borrowers must remember that the reduction of MCLR will impact their equated monthly instalment (EMI) only when the reset date of their loans arrives.
Typically, in a home loan, a bank offers MCLR with a reset period of six month or one year. On the reset date, the future EMIs of the borrowers will be calculated on the basis of the prevailing interest rate (i.e., MCLR plus margin rate).
Borrowers’ now have an option to switch their existing MCLR linked home loan to external-benchmark linked home loan. This can be done by paying an administrative cost.
SBI is the largest commercial bank in India. It also has a market share of 25 per cent each in home loans and auto loans, it stated.