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Home Articles From Today, SBI Home Loans Get Cheaper

From Today, SBI Home Loans Get Cheaper

IndianMoney.com Research Team | Updated On Wednesday, September 11,2019, 04:11 PM

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From Today, SBI Home Loans Get Cheaper

 

 

SBI which is India’s largest lender looks to dominate the home loan market in India. SBI home loan market share is 35%. SBI has cut the Marginal Cost of Funds based Lending Rate or MCLR from 8.25% to 8.15%. SBI has reduced benchmark lending rates by 10 bps (This is 0.1%) across all tenors. This new SBI home loan rate is available from today. This is the 5th consecutive MCLR reduction by SBI in FY 2019-20.

RBI has cut repo rates by 35 bps from 5.75% to 5.4%. This helps banks cut MCLR. SBI has cut MCLR and this means lower home loan rates.

SBI floating rate home loan is linked to the one-year MCLR. It has a one-year reset clause. What is MCLR? What is home loan reset clause and why does it matter? Let’s find out.

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From Today, SBI Home Loans Get Cheaper

What is SBI Home Loan?

SBI offers home loan for house purchase, home renovation, home extension and home construction. The house is collateral for the SBI home loan.

SBI offers home loans in the range of 8.05% to 8.85%. SBI offers the cheapest home loan at 8.05%. SBI offers special interest rate for women borrowers.

See Also: Repo Linked Home Loans: Your Home Loan Rate Will Go Down

These are the Popular SBI Home Loans:

  • SBI Repo Rate-linked home loan
  • SBI MCLR linked home loan
  • SBI Privilege Home Loan
  • SBI Shaurya Home Loan
  • SBI Tribal Plus Home Loan (Special Loan for Hilly/Tribal Areas)
  • SBI FlexiPay Home Loan
  • SBI Pal
  • SBI Pre-approved Home Loan
  • SBI Gram Niwas
  •  SBI Home Loan Balance Transfer
  • SBI NRI Home Loan
  • SBIHome Top Up Loan
  • SBI Realty Home Loan
  • SBI Bridge Home Loan

i. TERM LOANS UPTO RS 30 LACS

        Revised Interest Rate

 

Salaried Borrowers (%)

Non-Salaried Borrowers (%)

Women

LTV ≤ 80

1 Year MCLR+ 10 bps, ER:8.25

1 Year MCLR+ 25 bps, ER:8.40

LTV > 80
and ≤ 90

1 Year MCLR+ 20 bps, ER:8.35

1 Year MCLR+ 35 bps, ER:8.50

Other

            

LTV ≤ 80

1 Year MCLR+ 15 bps, ER:8.30

1 Year MCLR+ 30 bps, ER:8.45

LTV > 80
and ≤ 90

1 Year MCLR+ 25 bps, ER:8.40

1 Year MCLR+ 40 bps, ER:8.55

ii. TERM LOANS ABOVE RS 30 LACS AND UPTO RS 75 LACS:

Revised Interest Rate

 

Salaried Borrowers (%)

Non-Salaried Borrowers (%)

Women

RG-1, 2 ,3

1 Year MCLR+ 35 bps, ER:8.50

1 Year MCLR+ 50 bps, ER:8.65

RG-4, 5, 6

1 Year MCLR+ 45 bps, ER:8.60

1 Year MCLR+ 60 bps, ER:8.75

Other

RG-1, 2, 3

1 Year MCLR+ 40 bps, ER:8.55

1 Year MCLR+ 55 bps, ER:8.70

RG-4, 5, 6

1 Year MCLR+ 50 bps, ER:8.65

1 Year MCLR+ 65 bps, ER:8.80

iii. TERM LOANS ABOVE RS 75.00 LACS – FLOATING RATE

Revised Interest Rate

 

Salaried Borrowers (%)

Non-Salaried Borrowers (%)

Women

RG-1, 2 ,3

1 Year MCLR+ 45 bps, ER:8.60

1 Year MCLR+ 60 bps, ER:8.75

RG-4, 5, 6

1 Year MCLR+ 55 bps, ER:8.70

1 Year MCLR+ 70 bps, ER:8.85

Other

RG-1, 2, 3

1 Year MCLR+ 50 bps, ER:8.65

1 Year MCLR+ 65 bps, ER:8.80

RG-4, 5, 6

1 Year MCLR+ 60 bps, ER:8.75

1 Year MCLR+ 80 bps, ER:8.95

What is MCLR?

Marginal Cost of Funds based lending rate or MCLR depends on tenor premium, operating expenses, marginal cost of funds and the cost of maintaining the CRR. Banks don’t offer loans below MCLR. Banks charge a spread above MCLR to arrive at your home loan interest rate.

See Also: 3 Major Banks Reduce Home Loan Interest Rates

How is MCLR Calculated?

These are the terms used in MCLR:

  • Marginal Cost of Funds: Before you understand marginal cost of funds, let’s pay attention to cost of funds. Banks borrow to meet expenses called cost of funds. Marginal cost of funds is the additional costs banks incur to purchase an asset or even make an investment.
  • Operating expenses: These are the costs banks incur to offer you loan products like a home loan.
  • Tenor Premiums: Tenor is basically the time you have left to repay the loan. Different loans have different tenor. If banks lend for higher tenor there’s more risk and this means a higher tenor premium.
  • CRR (Negative cost of carry): Banks maintain a certain percentage of deposits with RBI called cash reserve ratio or CRR. The cost of maintaining CRR is borne by the banks.

Tenor

Existing MCLR (In %)

Revised MCLR (In %)

Over night

7.9%

7.8%

One Month

7.9%

7.8%

Three Month

7.95%

7.85%

Six Month

8.1%

8%

One Year

8.25%

8.15%

Two Years

8.35%

8.25%

Three Years

8.45%

8.35%

See Also: How to Switch to Repo-Linked Home Loan?

SBI Home Loan Reset Clause:

SBI floating rate home loans are linked to the one-year MCLR. They have a one-year reset clause. Now, SBI has cut MCLR in September 2019. If your home loan reset date is in August, your SBI home loan rate will not change till August 2020. Only then will home loan EMIs fall.

SBI Repo Rate-Linked Home Loan:

Customers always complain that banks don’t reduce home loan rates. To solve this problem; you have SBI repo rate-linked home loan.

Repo rate is the rate at which banks borrow from the RBI. RBI has cut repo rate by 110 basis points this year. SBI wants you and other customers to enjoy lower home loan EMIs. SBI offers repo-linked lending rates for cheap home loans.

Why SBI Repo Rate-Linked Home Loan?

ICICI Bank one-year MCLR stayed unchanged at 8.65% from October 2018 to August 2019. RBI cut the repo rate from 6.5% to 5.4% in this period. Banks are not passing the benefits of repo rate cut and so SBI introduced repo rate-linked home loan in July.

The RBI repo rate is 5.4%.

The loan rate is 2.25% above the repo rate.

The repo-linked lending rate is 7.65%. (5.4% + 2.25%)

SBI then adds a spread of 40-55 bps depending on the credit score of home loan borrowers. SBI offers you a home loan of 8.05% (7.65% + 0.4%) if you have good CIBIL score.

For home loans up to Rs 75 Lakhs, SBI charges home loan interest rates between 8.05% to 8.2% depending on CIBIL score. SBI charges a higher spread for home loan above Rs 75 Lakhs. This is 90-110 bps above the repo-linked lending rate. As RBI cuts repo rates, many citizens rush to avail home loans at low interest rates.

See Also: How to Get The Cheapest Home Loan?

SBI Reviews Repo-Linked Home Loan:

SBI offered repo-linked home loans only to customers with a monthly income of Rs 50,000 or more. There was also a condition that borrowers had to repay at least 3% of the home loan principal as part of the loan. Home loan instalments would not be equal and would shrink across home loan tenure. This meant customers required higher income eligibility vis-a-vis MCLR home loans.

The RBI wants all retail loans to be linked to an external benchmark. If this happens it’s good for customers as banks would offer only repo-linked loans. This could mean less customers opting for MCLR home loan. You can opt for home loan balance transfer to enjoy lower home loan rates.

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