New Delhi:With his one sentence to banks, PM Narendra Modi seems to have given a bonanza to home buyers. After the reduction of interest rates by State Bank Of India on Sunday, its home loan rates are now lowest in six years. SBI has cut its effective rate to 8.6% from 9.10%.
This means that now home loans up to Rs 75 lakh will now be available at 8.6% instead of 9.1% earlier. The rate would be 8.65% for others, instead of 9.15% earlier.Apart from SBI, Punjab National Bank and Union Bank of India too have reduced rates. The private banks are likely to announce rate cut any time now.
Now with announcement of new rate, home loan up to Ra 9 lakh will be available at 4% under the new scheme announced by PM, though detail guidelines of the scheme have not been announced yet
WILL YOU BENEFIT FROM RATE CUT
Cut in MCLR (marginal cost of lending rate) by banks means that new borrowers will get loans at the cheaper rates. This is because home loans are linked to one-year MCLR, the rates are locked in for 12 months.
Older loans will get the benefit of the new rates only after their one-year lock-in ends.
You will not benefit from the rate cut if you had taken home loan before April 2016, as your EMIs will be linked to the previous benchmark. If you want to take benefit of new rates, you will have to enter into a new agreement with the bank (by paying a small fee) to get loans linked to MCLR.
On the new housing scheme announced by the PM, one expert was quoted as saying “ EMI cheques will be smaller than the rent cheques in terms of value now”.