Benefit From A Drop In Home Loan Interest Rates In 2017

By BankBazaar | January 20, 2017

Benefit From A Drop In Home Loan Interest Rates In 2017

Following the demonetisation drive announced by Prime Minister Narendra Modi in November 2016, a decrease in loan lending rates was highly anticipated by everyone.

Well, the New Year started with some good news for loan borrowers. Since the banks saw unprecedented inflows through cash deposits following the demonetisation of the old Rs. 500 and Rs. 1,000 currency, they have begun to reduce the lending rates.

Additional Reading: Why Your Home Loan EMI Is Still High

Many banks such as Punjab National Bank, Union Bank of India and State Bank of India (SBI) have taken the lead in announcing a decrease in benchmark lending rates.

State Bank of India has slashed Home Loan rates by 50 basis points (bps) for loans up to Rs. 75 lakh.

Additional Reading: SBI Home Loans

Home Loans are available from State Bank of India at 8.65 % instead of 9.15 % for all borrowers.

Women borrowers get extra benefit

Women borrowers availing Home Loans from State Bank of India can enjoy an additional reduction of 5 basis points. Woot!

Benefits for new borrowers

Are you a new borrower? You have reason to celebrate! The 50 basis points drop in interest rates will increase the eligibility of new borrowers.

Wondering how? Let’s take an example, shall we? A borrower with an income of Rs. 1 lakh was eligible for a Home Loan of Rs. 55 lakh for a tenure of 20 years if the lender capped the EMI at 50% on the borrower’s monthly income. The same applicant can now get Rs. 58 lakh for a Home loan.

Need a loan with a longer tenure? For a loan with a tenure of 25 years, the eligibility increases to Rs. 62 lakh from Rs. 59 lakh previously.

Additional Reading: Did You Know About These Tax Benefits On Home Loans?

Got an existing loan?

Here’s how existing customers will benefit from the revised interest rates. The dip in the interest rate can significantly reduce the tenure of the loan.

When there is a change in the interest rates, the bank will not revise the EMI on a loan. They will make a revision to the payment tenure of the loan.

Additional Reading: When Is Home Loan Refinancing A Good Idea?

Have an MCLR-linked Home Loan?
A Home Loan that is linked to Marginal Cost of Funding Lending Rate (MCLR), will not be revised immediately.

Why?

There is no set time period within which banks need to revise MCLR linked loans. Some banks may revise the rates on a quarterly basis, others may revise rates after a span of 1 year.

If the rates see a dip, borrowers won’t get the benefits immediately. But wait. When the interest rates are on the upswing, this will result in a delay in resetting the interest rates.

The word going around on the grapevine is that in the current scenario, it is a better idea to choose a Home Loan from a bank that offers revision of MCLR on a quarterly basis.

Haven’t you heard that popular saying “Strike while the iron is hot”? There was never a better time to cash in on the multitude of benefits offered with a Home Loan. Get one today, why don’t you?

Bank Reduction New 1-Year MCLR Rate Existing Rate
State Bank of India 50 basis points 8.00% 8.9%
Bank of Baroda 55-75 basis points 8.35% 9.60%
Bank of Maharashtra 30 basis points 8.95%
Allahabad Bank 8.60%
Sundaram BNP Paribas Home Finance 8.70% 9.20%
Union Bank 8.65% 9.30%
IDBI Bank 9.15% 9.30%
Indian Overseas Bank 9.15% 9.50%
Punjab National Bank 8.45% 9.15%
State Bank of Travancore 9.20% 9.45%

Bonus Read: Home Loan Handbook: All Questions Answered

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.
Category: Home loan news Yahoo
Dheeraj Kapoor

About Dheeraj Kapoor

BankBazaar is the world's first neutral online marketplace for instant customised rate quotes on Loans, Credit Cards, Insurance and Investment products. Shop for financial products just like you buy everything else now - online.

4 thoughts on “Benefit From A Drop In Home Loan Interest Rates In 2017

    1. AvatarTeam BankBazaar

      Hi Rishika,

      Glad we could be of help. Thanks for stopping by.

      Cheers,
      Team BankBazaar

      Reply
    1. AvatarTeam BankBazaar

      Hi Erina Satyanarayana Murthy,

      Appreciate your feedback. Have a nice day!
      Cheers,
      Team BankBazaar

      Reply

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