Real estate news on Home Loan EMIs Set to Fall as SBI Cuts Base Rate

Property loans/ Home loans, State Bank of India (SBI), Home Loan
Posted on Jun 09, 2015

Equated monthly installments on home and auto loans are likely to come down after State Bank of India announced a 15-basis point reduction in base rate on Tuesday. New rates would be effective June 8.

After Tuesday's cut, SBI's base rate or the minimum lending rate will come down to 9.70 per cent. Lenders that compete directly with SBI, such as ICICI Bank and HDFC Bank, are expected to follow suit, analysts say.

SBI's rate cut announcement came hours after the Reserve Bank cut the repo rate by 25 basis points to 7.25 per cent.

Earlier in the day, Reserve Bank Governor Raghuram Rajan had asked lenders to start cutting interest rates following the repo rate reduction by the central bank.

Noting that banks have started passing through some of the past rate cuts into their lending rates, Dr Rajan said, "Banks should pass through the sequence of rate cuts into lending rates."

This was the second straight policy when Dr Rajan openly asked lenders to lower interest rates. In April, the governor had come down heavily on banks, saying the notion that cost of funds have not gone down is "nonsense".

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