Kotak Mahindra Bank on Thursday announced that it has reduced its lowest home loan interest rate by 15 basis points (bps) to 6.5% per annum. The special rate will be available under a limited-period festive offer beginning September 10 and ending on November 8.
While the special rate will be available across all loan amounts, a borrower will need to have a minimum credit score of 800 to be offered a loan at 6.5%. State Bank of India’s (SBI) home loans start at 6.7%, while both Housing Development Finance Corporation (HDFC) and ICICI Bank price their cheapest home loans at 6.75%.
Ambuj Chandna, president – consumer assets, Kotak Mahindra Bank, said that at 6.5%, the lender’s pricing will be significantly more attractive than that of some of its competitors. “This is a long-term play for us and while the 6.5% rate is specifically applicable to the festive period, let me assure all consumers that we will continue to be extremely competitive on pricing, when it comes to home loans even after this period,” he said.
Kotak Mahindra Bank has been growing in the home loans segment quite aggressively and it has been a high-growth segment for the lender over the last one year, Chandna added. “We believe there is an opportunity to grow. The strategy is aided by the fact that there is liquidity, interest rates are down and gives us a cushion,” he said.
The lender has 25-26% of its lending book in mortgages. The home loan book has been one of the best-performing books for the bank and apart from some minor shifts resulting from the pandemic, on a relative basis the book has done well, according to Chandna. Kotak Mahindra Bank’s rates have helped it to attract better-quality customers as home loan borrowers are very price-sensitive, he said.