SBI cuts external benchmark rate by 25 bps, home loans to get cheaper

NEW DELHI: State Bank of India (SBI) on Monday announced reduction in its external benchmark based rate (EBR) by 25 basis points (bps) to 7.80 per cent from 8.05 per cent. The revised rates will be come into effect from January 1, 2020, the country's largest lender said in a release.
"With this reduction, interest rate for existing home loan customers as well as MSME (micro, small and medium enterprises) borrowers who have availed loans linked to external benchmark based Rate would come down by 25 bps," it added.
New homebuyers will get loans at an interest rate starting from 7.90 per cent per annum from 8.15 per cent earlier, SBI further stated.
SBI charges a spread of 265 bps over the RBI's repo rate (currently at 5.15%) to calculate its external benchmark-based lending rate. The lender also charges a premium of 10 basis points to 75 basis points for pricing the effective interest on the home loan for the customer.
Banks are required to reset the external benchmark based rate at least once in three months.
Earlier this month, SBI had announced a cut in one-year MCLR (marginal cost of funds-based lending rate) rate by 10 bps, effective from December 10, 2019.
After the latest cut, SBI's one-year MCLR stood at 7.90 per cent per annum from 8 per cent per annum. This is the eighth consecutive cut in MCLR by SBI this fiscal.