The Introduction of MCLR Rate: The MCLR system introduced in 2016 and brought into effect from 1st April 2016; narrowed down the Housing Loan rates by a considerable margin. The borrowers opting for MCLR rate will be paying a lower interest rate as compared to borrowers subscribed to base-rate, plus they will receive immediate benefit from the interest rate deduction on a Home Loan in the form of lower EMI after every announcement.
Floating Interest Rate: There are two kinds of interest rate offered with Home Loans: fixed interest rate, floating interest rate. Now, both have their own pros and cons but the floating rate Home Loan subscribers pay a lower interest rate. Furthermore, because the floating rate depends on market dynamics and the interest rate is linked directly to bank’s Marginal Cost of Lending Rate (MCLR) or the NBFC’s base rate; after every quarterly base rate announcements by the Reserve Bank of India, the borrower will receive the benefits.
Repo Rate Deduction: Recently, the repo rate cut by the Reserve Bank of India from 6.25% p.a to 6% p.a is the lowest in nearly seven years. Furthermore, the same is going to translate in lower interest rate on Home Loan.
Reference Read:
Interest Rate Cut – In Favour of Home Loan Borrowers
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