July 15, 2020 | 11:38 PM IST
home loan

Home loan borrowers can cheer-up as lenders slash interest rates on EMIs

It’s raining good news for home loan borrowers. The lending banks and corporations have reduced their interest rates on home loans giving for borrowers facing income uncertainty a major respite.

While the Reserve Bank of India (RBI) slashed key interest rates by 40 basis points to around 7% - bringing it to a 15-year low, the Life Insurance Corporation of India’s Housing Finance Limited (LIC HFL) has also reduced its interest rates with immediate effect on Saturday.

This means that the customers will benefit from the amount of Equated Monthly Installments (EMI) as the banks will slash the Marginal Cost of Funds on Lending Rates (MCLR) and pass on the benefits to them.

The RBI also said that borrowers who are undergoing difficulty in repaying the EMIs can avail an additional three-month moratorium. This would even include those who have not availed moratorium so far but are now unable to pay the installments. The slash will affect the home loans as well as other retail loans.

The cut will enable home loans to become cheaper for borrowers whose EMIs are linked to repo rate and housing finance companies and those banks that have not linked their loan rates to the repo rate will be unable to pass on the reduction to the customers.

On the other hand, Managing Director and CEO of LIC HFL Siddhartha Mohanty said, “We want to bring confidence back to the sector and will do our part in supporting the real estate industry and the economy.”

He said that the new customers with a CIBIL score of 800 or more will have to pay a 7.5% interest rate for any amount of loan. In addition to this, an additional reduction of 7.40% will be extended if the customer assigns a new or existing single premium term assurance policy with the sum assured equal to the loan amount to LIC HFL. 

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