Home Loan Gets Cheapest in 6 Years: Good News for Fresh Borrowers

Home Loan Gets Cheapest in 6 Years: Good News for Fresh Borrowers
The heavy slash down in bank home loan lending rates from some top banks have come as happy news for new borrowers. State Bank of India (SBI)’ home loan rates will now be at 8.6 percent which actually was 9.10 percent earlier as the MCLR has been reduced from 8.9 percent to 8 percent. Other banks like Punjab National Bank and Union Bank of India have also cut down their lending rates by up to 0.7 percent. This again is an exciting news for new borrowers as it indicates the reduction in the loan tenure if one is taking loan for 20-25 years, but existing borrowers will have to pay a marginal fee to shift their loans to the MCLR (Marginal cost for lending rate) based loan.

As asked by Prime Minister Narendra Modi in his address to the nation on Saturday to the banks to share with customers the benefit from the deluge of cash in old notes after the abolishing of 500 and 1000 rupees note on November 8, 2016. SBI seems to have drawn the inspiration from the same.

PM on Saturday had asked the banks to “keep the poor, the lower middle class, and the middle class at the focus of their activities,” and to act with “public interest” in mind.

For loans above 75 lakh, the rate is 8.65 percent for women borrowers and 8.70 percent for others.
For fixed home loans up to Rs. 30 lakh, SBI will charge an interest rate of 8.50 percent for women borrowers (8.55 percent for others). Under this scheme, the interest rate for the first two years will be fixed and thereafter linked to floating rate.

Speaking about its effect on Real Estate Market Mr. Anil Mithas (Chairman & Managing Director) of Unnati Fortune Group, one of the top builders in North India quoted “The decision to cut down the rate of interest by banks like SBI and PNB will impart a fresh impetus to first time home buyers and this may result in the rise of sales and overall growth of real estate,which was sluggish over past couple of years.”

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