SBI Cuts Home Loan Rates after RBI Rate Cut: Relief for Borrowers
In a significant move for home loan borrowers, the State Bank of India (SBI), the country's largest public sector bank, has announced a reduction in its lending rates. This comes after the Reserve Bank of India (RBI) reduced its repo rate by 25 basis points (bps), from 6.50% to 6.25%, offering relief to borrowers across the country.
SBI has lowered its External Benchmark Based Lending Rate (EBLR) and Repo Linked Lending Rate (RLLR), directly benefiting home loan customers with floating rates. However, the bank has decided to keep its Marginal Cost Based Lending Rates (MCLR) and Benchmark Prime Lending Rates (BPLR) unchanged.
What Is EBLR and RLLR?
The External Benchmark Based Lending Rate (EBLR) and Repo Linked Lending Rate (RLLR) are key interest rates that determine the cost of loans for customers. Since 2019, SBI has linked its floating-rate home loans to these rates. The reduction in both EBLR and RLLR means that home loan interest rates will decrease, leading to lower Equated Monthly Installments (EMIs) or a shorter loan tenure.
Revised EBLR and RLLR Rates
Previous EBLR: 9.15% + CRP + BSP Revised EBLR: 8.90% + CRP + BSP The EBLR has been reduced by 0.25%, bringing relief to borrowers with floating-rate loans. Previous RLLR: 8.75% + CRP Revised RLLR: 8.50% + CRP A 0.25% reduction in RLLR makes borrowing cheaper for those with loans linked to the repo rate.Impact on Borrowers
The reduction in EBLR and RLLR means borrowers with loans linked to these rates can now enjoy a decrease in their EMIs, which translates to lower monthly payments. Alternatively, borrowers can choose to reduce their loan tenure, making their loans more affordable and quicker to repay.
For new borrowers, this is an excellent opportunity to avail loans at lower rates, making home ownership more accessible. Existing borrowers with floating-rate loans tied to EBLR or RLLR will also benefit from this cut. However, borrowers who are currently on MCLR-linked loans may not see the same reduction and might want to explore refinancing options to take advantage of the new lower rates.
Why Is This Happening?
The RBI’s decision to reduce the repo rate by 25 bps has prompted several leading public sector banks, including Canara Bank, Punjab National Bank, Union Bank of India, and Bank of Baroda, to revise their lending rates. SBI, following suit, has passed on the benefit of lower borrowing costs to its customers by reducing EBLR and RLLR, which are directly influenced by the RBI’s repo rate.
What Should Borrowers Do?
Borrowers with floating-rate loans linked to EBLR or RLLR should review their loan agreements to understand how these changes affect their EMIs or loan tenure. It is also a good time for new borrowers to shop around and compare lending rates across different banks to find the best deal.
With the current trend of decreasing interest rates, borrowers should stay alert to repo rate movements and consider refinancing their loans if they are looking for lower borrowing costs.
SBI’s decision to reduce EBLR and RLLR brings much-needed relief to borrowers, offering them an opportunity to benefit from lower interest rates, reduced EMIs, or quicker loan repayments.