SBI home loan: Interest rate falls below 7%; all you need to know

State Bank of India (SBI) customers can avail cheaper home loans starting Friday. On Wednesday, SBI reduced its marginal cost of funds-based lending rate (MCLR) by 5-10 basis points (bps) for shorter tenures, effective July 10. The reduction in MCLR for shorter tenor - up to three months - is aimed at boosting credit offtake and revive demand, according to a statement by SBI. If a customer's floating rate home loan is linked to MCLR or marginal cost of funds based lending rate, he can avail the reset clause and from that date the new rates will become applicable.

With this revision, the bank's MCLR of up to three months' tenor has come down to 6.65 per cent per annum, which is at par with its external benchmark-based lending rate (EBLR). This is the 14th consecutive reduction in the bank's MCLR, which continues to be the lowest in the market.

Another state-owned lender Indian Overseas Bank (IOB) on Wednesday also announced reduction in its MCLR by up to 25 basis points across all tenors, effective July 10. The bank has revised downward its one-year MCLR by 20 bps to 7.75 per cent from 7.95 per cent, according to a regulatory filing. The new six-month MCLR of IOB will stand at 7.65 per cent, against 7.90 per cent.

On Wednesday, HDFC Bank had also cut its MCLR rates across tenors by 20 bps. HDFC Bank's one-year MCLR has come down to 7.45 per cent.Also read: Govt shelves plan to merge 3 insurance firms; focus on profitability

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