If you are planning to take a home loan from the State Bank of India (SBI) or are already an existing borrower, there is some positive news for you. SBI, the country’s leading bank, has reduced its External Benchmark Lending Rate (EBLR) and Repo Linked Lending Rate (RLLR). This move will lead to lower interest rates on home loans and several other types of loans, ultimately reducing the EMI burden for customers.
Reason Behind the Rate Reduction
This reduction follows the Reserve Bank of India’s (RBI) recent decision to cut the repo rate by 0.25% (25 basis points). The revised interest rates will come into effect from February 15, 2025.
Details of SBI’s Rate Cut
SBI has officially announced that its EBLR has been reduced from 9.15% to 8.90%. Similarly, the RLLR has been slashed from 8.75% to 8.50%. This reduction will benefit borrowers whose loans are linked to these benchmark rates. A decrease in interest rates can either reduce the monthly EMI or shorten the loan tenure, providing flexibility to borrowers. Notably, SBI has kept its Marginal Cost of Funds Based Lending Rate (MCLR), Base Rate, and Benchmark Prime Lending Rate (BPLR) unchanged.
Impact of EBLR and RLLR Reduction
Since October 1, 2019, SBI has tied its floating rate home loans to the External Benchmark Lending Rate (EBLR). With the latest 0.25% reduction in EBLR, borrowers with home loans, personal loans, and other retail loans will experience some financial relief. Similarly, the 0.25% cut in RLLR will benefit those whose loans are directly linked to the RBI’s repo rate.
Comparison of Old and New Interest Rates
- EBLR: Previously 9.15% + CRP + BSP; Now 8.90% + CRP + BSP
- RLLR: Previously 8.75% + CRP; Now 8.50% + CRP
Who Will Benefit from This Rate Cut?
Borrowers with floating rate home loans will witness a reduction in their EMIs or the opportunity to shorten their loan tenure. However, customers with loans based on MCLR will not automatically benefit from this rate cut. Such borrowers may consider shifting their loans to EBLR or RLLR to take advantage of the lower rates.
What Should Customers Do Next?
Following this interest rate reduction, SBI’s home loans may become more attractive to new borrowers. Existing borrowers should review their current EMI schedules and explore refinancing options if required. Additionally, it is advisable to compare SBI’s revised rates with other banks, as lower interest rates can significantly reduce the overall cost of borrowing.
This rate cut is expected to ease the financial burden on borrowers and further strengthen SBI’s position as a preferred choice for home loans.