More banks cut rates by up to 0.9%

In a move that will help bring down the cost of home, auto and other loans linked to the marginal cost of funds-based lending rate (MCLR), more banks slashed their benchmark lending rates on January 4, 2017.

Following this reduction, the one-year MCLR rate of state-owned Canara Bank has come down to 8.45%, down by 0.7 percentage points. Similarly, the country’s second biggest private lender, HDFC Bank, also cut its benchmark lending rate by 0.75-0.90 percentage points across multiple tenures, joining over a dozen banks and housing finance companies that have slashed rates in the last few days.

Mortgage firm DHFL too reduced its home loan lending rate by 0.5%, in line with competitors.

Following the reduction, rates on home loans for various maturities, will vary from 8.60% to 9.10%.

The government’s recent decision to provide interest rate relief to home buyers and to those who wish to buy a home in 2017, as well as several past initiatives, have created a growth-enabling and conducive environment for the housing finance sector, DHFL’s CEO, Harshil Mehta said.

Even though IDBI Bank and State Bank of Travancore had announced cuts in the last week of 2016, the reduction in lending rate by major banks got-off with the country’s largest lender SBI slashing its offerings by a flat 0.90 percentage point on January 1, 2017, a day after being exhorted by prime minister Narendra Modi to help the poor and marginalised sections. SBI has reduced its one-year MCLR to 8% and ICICI Bank has brought it down to 8.20%.

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