Home loan competition intensifies as banks embark on a wave of lower interest rates



As the economy is recovering and the home buying market is expected to see growth in the upcoming festival season, lenders are rushing to lure home loan customers with rate cuts. ‘interest. Although the Reserve Bank of India (RBI) has kept policy rates unchanged at 4% over the past seven review meetings, banks led by the State Bank of India, Kotak Mahindra, PNB and others have reduced the rate. mortgage rates last week, triggering competition between banks to attract customers.

SBI, which has a home loan portfolio of Rs 5.05 lakh crore, now offers home loans tied to the credit score at 6.70% regardless of the loan amount. The offer translates into a saving of 45 basis points, which translates into a huge interest savings of over Rs 8 lakh, for a loan of Rs 75 lakh with a term of 30 years, according to the bank. The outstanding mortgage loans in the banking sector showed a growth rate of 8.9% to Rs 14.66 lakh crore in July 2021 compared to Rs 13.46 lakh crore a year ago, indicating that banks have disbursed approximately Rs 120,000 crore as home loans during the 12-month despite the uncertainties created by the Covid pandemic. The home loan segment is considered to be the safest area for bank loans with minimal non-performing assets.

The Punjab National Bank (PNB) reduced the pension-based lending rate by 25 basis points (bps) to 6.55%. It revised the Pension Indexed Loan Rate (RLLR) from 6.80% to 6.55%, effective September 17. The bank also announced that it is offering complementary home loans at an attractive interest rate to existing balance transfers and balance. case. PNB already offers full service fee / processing fee waiver on home loans, auto loans, personal loans, retirement loans, myProperty loans and gold loans as part of its bonanza offering from festival, he said.

Kotak Mahindra Bank kicked off the holiday season by announcing that it has further reduced interest rates on its home loans by an additional 15 basis points from 6.65% to 6 , 50%. Bank of Baroda offers a 0.25% exemption from existing applicable rates for home and auto loans. In addition to this, the bank also offers a mortgage processing fee waiver. Mortgage rates will now start at 6.75% and auto loan rates will start at 7.00%.

SBI has removed the distinction between a salaried borrower and a non-salaried borrower. Previously, the rate applicable to a self-employed borrower was 15 basis points higher than the interest rate applicable to a salaried borrower. This would lead to a new interest saving of 15 basis points for non-salaried borrowers.
CS Setty, Managing Director (Retail and Digital Banking), SBI, said: “In general, concessional interest rates are applicable for a loan up to a certain limit and are also related to the profession of borrower. This time, we have made the offers more inclusive and the offers are accessible to all segments of borrowers regardless of the amount of the loan and the profession of the borrower. SBI’s 6.70% home loan offer is also applicable to balance transfer cases. “We believe zero processing fees and concessional interest rates during the holiday season will make homeownership more affordable,” said Setty.

On falling interest rates, Ambuj Chandna, President of Consumer Assets, Kotak Mahindra Bank said, “As the world has changed and we spend more time at home, our lifestyles have also changed. evolved. People look for comfortable homes where the whole family can work, play and spend quality time together. HDFC and Bajaj Finserv also offer 6.75 percent home loans. Banks and the real estate segment are basing their hopes on the segment’s faster growth as the economy is in recovery mode and the industry has almost returned to pre-pandemic levels. “The mood of homebuyers is pretty positive and this drop in rates will act as a catalyst for faster decisions. With the upcoming holiday season, which is seen as auspicious by many Indians to make expensive purchases, the timing of an interest rate cut couldn’t have been better, ”Amit said. Goyal, CEO of India Sotheby’s International Realty.

Ananta Singh Raghuvanshi, Senior Executive Director of Experion Developers, said: “A lower interest rate regime, competitive prices and stable supply are key factors this holiday season. We hope other banks will follow suit as well. In addition to the attractive lower interest rate regime, the fact that developers are offering festive programs should help boost real estate sales. For buyers of affordable and mid-range homes, mortgage interest rates are almost as important as real estate rates.

“Cost sensitivity impacts every aspect of their home buying journey, and a reduction in interest rates can be the difference between buying decisions and indecision. The drop in interest rates is likely to coincide with the holiday season. This year there is a lot of pent-up demand waiting to hit the market, ”said Anuj Puri, President of ANAROCK Property Consultants.



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