Kotak Mahindra Bank Ltd. will offer home loans at 6.5%—the lowest rates have been in years. A period of sharply lower policy interest rates, ample liquidity and a clamour by banks to gain share in the relatively stable home loan market, have all prompted a sharp decline since 2018.
Kicking off festival offerings, Kotak Mahindra Bank cut its home loan rate by 15 basis points to 6.5% for the festive period. The rate will be applicable for the period between Sept. 10 and Nov. 8.
To be sure, floating rate retail loans, including home loans, are now linked to an external benchmark. As such, any rise in the repo rate will mean a reset in the loan rate. Any changes in credit quality will also lead to a reset.
The lower rates will be available for loans of all sizes, according to Ambuj Chandna, president for consumer assets at Kotak Mahindra Bank. Currently, about 15-20% of the bank’s home loan disbursements happen at the lowest rates, he said.
Kotak Mahindra Bank, like most other lenders, is focusing on secured retail loans where default rates have been lower compared to unsecured personal loans. Collateral backing home loans also provides comfort to lenders.
According to Chandna, home loans have become a major focus area for the bank. “We will focus on salaried and self employed customers to push up our home loan offering,” he said. “We have seen strong demand for all retail products, including credit cards in recent times.”
As of June 30, Kotak Mahindra Bank’s home and loans against property portfolio rose 18% year-on-year to Rs 55,623 crore. Across the banking sector, housing loans rose 10% in July over a year ago.