A week after the Reserve Bank of India (RBI) left the repo rate unchanged at 7.75% at its monetary policy announcement, banks and mortgage lenders have trimmed rates on their home loan portfolios to attract more customers.
Kotak Mahindra Bank is the latest lender to reduce its interest rates on home loans and now offers a rate of 10.25% from the earlier rate of 10.5% for loans up to R75 lakh and 10.5% from the earlier rate of 11% for loans above R75 lakh. The new interest rates will be available till January 31. “We’ve realigned our rates by 25 basis points,” said Sumit Bali, director and head of consumer lending at Kotak Mahindra Bank. Bali added that several banks have liquidity through the foreign currency non-resident (FCNR) deposits and are deploying funds to the housing sector as demand for corporate loans has been slow. M Narendra, the chairman and managing director at Indian Overseas Bank, said the public sector lender is considering offering home loans at 10.25% for loans up to R75 lakh. The bank currently offers home loans at 10.25% for loans up to R30 lakh.
Meanwhile, Ranjan Dhawan, executive director at Bank of Baroda, said the bank is evaluating the moves taken by other banks, but is yet to take a decision on lowering rates. ICICI Bank had announced a reduction of up to 15 basis points (bps) for its new home loan customers. Sources say ICICI Bank will offer home loans up to R75 lakh for 10.25%. For loans above R75 lakh, the bank will charge an annual interest rate of 10.5% to its new customers. The new rates are applicable for all new home loan applications starting Saturday and will be available till January 31, sources said.
The move follows decisions by State Bank of India and HDFC to cut their respective home loan rates. SBI lowered its interest rates by 15-25 bps for home loans, while HDFC said it will offer loans up to R75 lakh at 10.25% under a special scheme. ICICI Bank is the first private sector bank to have announced reduction in interest rates after Reserve Bank of India decided to keep the repo rate untouched at 7.75% in its monetary policy announcement this week.