Home Loan Interest Rate Is Linked With Repo Rate


SBI has announced the launch of home loans linked to the repo rate, effective from July 1, 2019. RBI is continuously working on providing direct benefits to the borrowers, and therefore, they have shifted from PLR to base rate and then MCLR rate. The idea of launching MCLR Linked home loan was to ensure that any change in repo rate will change the cost of raising funds for the bank which will, in turn, lead to a change in the lending rates. There have been many repo rate cut by RBI showing that banks are not comfortable in passing rate cut benefits to the borrowers.
The new repo rate linked home loan product will make policy transmission automatic. If three will be any change in the repo rate, this will also lead to a change in lending rates. With this view, the SBI initiative of repo rate linked home loan is aimed at passing direct benefits to the borrowers and thereby ensuring greater transparency in consumer loans.


It benefits:

1) The rate of interest on home loans would be cheaper as compared to MCLR based home loans.
2) To be eligible for this loan, borrowers should have a yearly income of Rs. 6lakh.
3) You get higher tenure of up to 35 years as compared to 30 years in the case of MCLR based home loans.


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