NEW DELHI: Aiming to grow its market share in the home loan market, Kotak Mahindra Bank on Thursday announced a 0.15 percentage point cut in its lending rate in the highly competitive segment, offering mortgages from 6.50 per cent.
This is the lowest interest rate in more than a decade and one of the most competitive among rivals, its president for consumer assets, Ambuj Chandna told reporters in a virtual call.
Home loan at a lower rate of 6.50 per cent is a festive period offer available only for two months till November 8, and the lowest offering is for those having highest credit scores coming from the salaried segment.
In the past, its rivals which include HDFC and SBI, have responded to rate cuts by slashing their own offering and it would be interesting to see how they react this time.
Demand for home loans is coming because of a greater interest in home buying triggered by the pandemic, which has caused both work and education to shift to the homes, and also a downward trend in home prices, he said.
The aggressively priced home loans will be available for both fresh home loans and also to balance transfers, he said.
There has been an uptrend in the balance transfers, where a home buyer already servicing a loan is shifting to the lender for a lower rate, he said, adding that such transfers are happening for loans taken from both non-bank lenders and also top-tier banks.
The bank is able to cut the interest rate despite no rate cut from the policy side because of the excess liquidity in the system, he said, making it clear that other retail segments including credit cards are also seeing good pick-up in credit.
The bank's lowest rate offering had stood at 6.9 per cent last October, and had been cut twice since then to the current rate of 6.65 per cent. Chandna said over 15 per cent or a sizeable chunk of the customers fall in the lowest rate offering category.
He said mortgages constitute over a fourth of the lender's overall book and home loans have been a focus area for the last one year. However, he declined to share any data on how the market share has increased over the last one year or also give target on how much they wish to sell during the limited period offer.
The bank has not changed its underwriting standards for home loans and continues to follow the same practices, he said.
From an asset quality perspective, Chandna said the bank's home loan book has performed very well over the last year and added that the lowest rate offering helps it get the best quality customers.