After the Reserve Bank of India (RBI) cut down the major policy rate by 25 basis points to 5.25 per cent, leading public and private sector banks have begun the pass-through for the home loans.
Leading private sector lender HDFC Bank has reduced its marginal cost of funds-based lending rates by up to 5 basis points across tenures, with the MCLR now ranging between 8.30 per cent and 8.55 per cent. This is slightly lower than the earlier 8.35–8.60 per cent band.
Typically, the banks price a large portion of retail loans against external benchmarks like the repo rate or internal benchmarks, such as the Marginal Cost of Funds-Based Lending Rate (MCLR).
With the decrease in the policy rate, banks typically revise these benchmarks downwards.
Punjab National Bank has revised its repo-linked lending rate to 8.10 per cent, down from 8.35 per cent, while the Bank of Baroda has trimmed its benchmark retail loan rate to 7.90 per cent from 8.15 per cent.
Indian Bank has cut its repo-linked benchmark rate to 7.95 per cent, while Bank of India has lowered its repo-based lending rate to 8.10 per cent.
Bank of Maharashtra has also cut its home loan rate to 7.10 per cent from the existing 7.35 per cent. The bank has also lowered the car loan rates to 7.45 per cent.
The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) on Friday unanimously decided to reduce the repo rate by 25 basis points to 5.25 per cent with immediate effect, maintaining the ‘neutral’ stance.
Different banks have lowered their RLLR (Repo Linked Lending Rate), RBLR (Repo Based Lending Rate), and MCLR-linked rates.
Depending on loan tenors, existing borrowers are likely to benefit from lowered EMIs of their loans or a shorter loan tenure.