The largest lender in the country, SBI (State Bank of India), has dropped their interest rates on home loans by 5 basis points to 8.30%. This is now the lowest rate of interest for housing loans in the country. The bank has also cut interest rates for auto loans, now offering them at 8.70%.
The slash in interest rates by SBI has caused other lenders to drop their lending rates as well. A statement made by SBI said that these rates were effective from the 1st of November, and the reduction in rates is a direct repercussion of the drop in MCLR (marginal cost of funds based lending rate) a few days earlier. Prior to this, the bank had previously cut MCLR by 0.9% on January 1st of this year.
The Managing Director of SBI, P.K Gupta said that the rate cut combined with the broad distribution of technological advancements enhances customer experience and is exactly what a retail borrower is looking for.
For all housing loans for salaried individuals up to Rs.30 lakh, the rate of interest would be 8.30% p.a. Besides this, an eligible housing loan borrower can avail a discount of Rs.2.67 lakh as per PMAY (Pradhan Mantri Awas Yojana) scheme.
For a borrower of an auto loan, an interest rate of anywhere between 8.70% and 9.20% applies. This is a slight reduction compared to the earlier interest rates, which ranged from 8.75% to 9.25%.
Other lenders and financial institutions too would drop their interest rates on loans as a direct effect of SBI lowering theirs. This competitive nature of the market is also a boon to the customer of loans as this will provide him/her with very low rates of interest, while also providing a consumer with the freedom of choice.
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