NEW DELHI: As the financial year draws to a close, banks both public and private have unleashed a rate cut war in the home loan segment in order to bulk up their retail portfolio and stay competitive. Taking a cue from SBI, Kotak Mahindra Bank, and mortgage lender HDFC, private sector lender ICICI Bank on Friday reduced home loan interest rates to 6.7 per cent the lowest in 10 years for home loans up to Rs 75 lakh. For loans over Rs 75 lakh, it is 6.75 per cent.
The revised rates will be applicable till March 31. “We have seen a resurgence in demand from consumers, who want to buy homes for their own consumption, in the past few months. We believe that this is an opportune time for an individual to buy his/her dream home, considering the prevailing low-interest rates,” pointed out Ravi Narayanan, Head-Secured Assets, ICICI Bank.
Other banks. too, have been coming out with limited period offers on home loans. While SBI, which controls one-third of the home loan market, is now offering home loans starting at 6.7 per cent (6.8 per cent earlier), Kotak claims its offering to be the lowest in the market at 6.65 per cent (6.75 per cent earlier). Mortgage lender HDFC has also cut its retail prime lending rate on housing loans, on which its adjustable-rate home loans are benchmarked, to 6.75 per cent.
But, unlike SBI and Kotak, HDFC hasn’t cut loan rates for a limited period. Bankers say there has been a spurt in demand for these loans despite a drop in general consumer confidence in a contracting economy. These assets are seen as attractive bets more than ever compared to risky corporate loans. After a dip in the first half of 2020-21, home loans had grown nearly 9 per cent year-on-year as of November, compared to overall loan growth of 6 per cent.
Cheap rates
According to a report by Emkay Global Financial Services, systemic monthly home loan disbursement in February was at a high of Rs 75,000 crore as against Rs 40,000 crore on average mainly due to pent-up demand led by benign rates, attractive property prices, and a change in customer behaviour in favour of house ownership or bigger houses. SBI led the pack with a nearly 31 per cent market share, followed by HDFC group at 19 per cent and ICICI at 13 per cent
9 per cent growth in home loan disbursement up to Nov
6 per cent growth in overall loan disbursement up to Nov