mumbai home loan rates have fallen to their lowest level in six years with the state bank of india the countrys largest lender cutting the effective rate to 86 from 910 while the sbi cut its oneyear marginal cost of lending rate mclr the benchmark to which home loans are linked to 8 against 89 earlier it kept the spread above mclr at 60 basis points against 20 basis points earlier so home loans up to rs 75 lakh earlier available at 91 can now be taken at 86 for others the rate would be 865 against 915 earlier besides sbi the union bank of india and the punjab national bank also cut rates private sector banks like icici bank are expected to follow suit toi had carried a frontpage report on january 1 saying the sbi and other banks were set to cut rates following a prod from pm modi to signal that benefits of demonetisation in the form of record deposits are being shared with the poor and middle class the reduction in lending rates by several public sector banks will make the affordable home loan scheme announced by pm modi on sunday available at a little over 4 for borrowers seeking loans of up to rs 9 lakh details of the scheme are yet to be announced the reduction in mclr will mean that new borrowers will get loans at the cheaper rates since home loans are linked to oneyear mclr the rates are locked in for 12 months older loans will get the benefit of the new rates only after their oneyear lockin ends those who had availed loans before april 2016 would have their emis linked to the earlier benchmark the base rate these borrowers will have to enter into a fresh contract with the bank by paying a small fee to get loans linked to mclr sbi has also reintroduced a teaser rate loan where loans will be avilable at 85 for the first two years and at a floating rate in subsequent years these loans were discontinued five years ago after the rbi frowned on them other banks which have announced lower rates with effect from the new year include state bank of travancore idbi bank and indian overseas bank top officials of the sbi said that home loans would provide the bank with an alternative to parking funds in government bonds where the return is less than 7 meanwhile banks expect the interest subvention on loans for affordable homes and home extensions and small enterprises to counter the slowdown caused by monetary contraction following demonetisation the impact of the schemes is expected to be felt in lending and on the overall economy in the first quarter of fy18 today 45 of bank loans is going to only 300 companies the extreme concentration of bank credit on the top end of the corporate sector has begun to border on the ridiculous said rajiv lall md ceo idfc bank he added