After Prime Minister Narendra Modi’s New Year’s address to act in “public interest,” several banks have announced steep cuts in borrowing rates. Some of the leading banks in the country, including State Bank of India, lowered their borrowing rates by up to 90 basis points.

After a long and tiring wait, home-loan borrowers have finally got a reason to rejoice.  Home loan rates have fallen to their lowest level in six years with the State Bank of India, the country’s largest lender, cutting the effective rate to 8.6% from 9.10%.

Apart from SBI, several other banks including Union Bank of India and the Punjab National Bank have also decided to cut down rates. While the nation’s largest bank SBI has slashed its MCLR (marginal cost of lending rate) by 90 basis points across all-tenure loans, bringing down the effective home loan rate to 8.60% from 9.10% per annum earlier, Union Bank of India reduced its MCLR by 65-90 basis points for loans of various tenures and PNB cut its MCLR by 70 basis points for 1, 2 and 3-year tenures.

The current, as well as the prospective rate cuts, will undoubtedly benefit new home-loan borrowers as the prevailing rates will naturally apply in their case. What about existing borrowers? For the existing borrowers, the rate cut would take the time to reflect on the next reset period if they are on MCLR.

SBI has pegged its loan rates at about 0.65% above the one-year MCLR rates. It will charge an interest rate of 8.65% on home loans up to Rs 75 lakh, while for women the interest rate would be 8.60%.For loans above Rs 75 lakh, the interest rate would be 8.65% for women and 8.70% for others. These are all term loans.

IDBI Bank took the lead in reducing interest rates by 0.40% -one of the steepest in more than three years. Among the private lenders, Kotak Mahindra Bank today announced a 0.45 per cent reduction.

Here is a list of banks and their new home loan interest rate:

• SBI home loan interest rate: 8% from 8.9%
• Union Bank home loan interest rate: 8.65% from 9.3%
• IDBI Bank home loan interest rate: 9.15% from 9.3%
• SBT home loan interest rate: 9.2% from 9.45%
• IOB home loan interest rate: 9.15% from 9.5%
• PNB home loan interest rate: 8.45% from 9.15%
• ICICI home loan interest rate: 8.20% from 8.9%
• Andhra Bank home loan interest rate: 8.65% from 9.45%
• Kotak Mahindra Bank home loan interest rate: 9% from 9.20%

“Today, the huge surge of deposits is being deployed in very low yielding assets (gsecs & mss bonds). Credit growth is very tepid. Any increase in credit will help yield pickup and thereby spreads. If still no credit growth, then NIM (net interest margin) will be under stress. If that happens, or deposits flow out, then we will look at lowering deposit rates,” said SBI chairman Arundhati Bhattacharya.’

Banks have mobilized an estimated Rs 14.9 lakh crore of deposits following demonetisation during the last 50 days.