In view of the falling economic growth which for the September quarter touched a 26-quarter low of 4.5%, there is widely expected a cut in the key policy rate in the upcoming RBI meet on December 5. And as retail loans have been pegged to the repo rate, during the transmission end home loan borrowers will be able to get a lower interest rate than 8%.
In accordance with The Times of India poll, a number of economists look forward to a cut in repo rate by 25 basis points to 4.9%. Notably, amid controlled inflation level and to give a fillip to the sulking growth level, RBI in five successive revisions has cut repo rate by 1.35%. Currently, the repo rate stands at 5.15%, which is the lowest since March 2010.
At present, SBI's external benchmark rate (EBR) is set at 8.05%. After the RBI cuts rate by another 25 bps then the EBR will go down to 7.8%, and the applicable home loan rate will start from 7.95%.