The Reserve Back To India brought cheer in the real estate industry when it announced a cut in the repo rate by 25 basis points. The positive announcements made in the interim budget 2019, along with the recent reduction in the repo rate, is expected to boost the growth of residential realty.
After the announced cut, the repo rate now stands at 6.25 per cent, whereas the reverse repo rate is six per cent. However, quite contrary to the popular notion, the cut may not translate into lower home loan interest rates immediately, as banks usually take time to adjust their marginal cost of funds-based lending rates (MCLR).
Also, even after the lending bank adjusted the home loan rate, the immediate beneficiary of the rate cut would be new home buyers, because existing home loan borrowers will get the benefit only when the MCLR linked to their loan is reset.
In the coming months, RBI’s repo rate cut may reflect in the form of softening in the interest rates across banks. Here are the present interest rate range, EMI and processing fees charged by various banks for home loans:
| Lending Bank | Floating Interest Rate | EMI per Rs 1 Lakh for 20 years |
| Axis Bank | 8.9-9.15 | 893-909 |
| Bank Of Baroda | 8.75-9.75 | 884-949 |
| Bank Of India | 8.7-9.6 | 881-939 |
| Canara Bank | 8.75-8.95 | 884-897 |
| HDFC Ltd. | 8.9-9.8 | 893-952 |
| PNB | 8.75-8.85 | 884-890 |
| SBI | 8.75-9.35 | 884-922 |
| Syndicate Bank | 8.75 | 884 |
| United Bank | 8.65 | 877 |
| ICICI Bank | 9.1-9.3 | 906-919 |
| IOB | 8.7-8.95 | 881-897 |
Note:- The actual interest rate may vary, based on the credit profile of the loan applicant. Data in the table is only for illustration purpose.