Kotak cuts home loan rates to 6.5%, lowest among major lenders

Rates reduced by 15 bps, to be valid for the next 2 mths

Private sector lender Kotak Mahindra Bank has reduced its home loan rates by 15 basis points (bps) to 6.5 per cent ahead of the festive season. The cut will take effect from September 10, making it one of the lowest home loan rates in the country in over a decade, said the bank on Thursday.

The rate of 6.5 per cent will be valid for two months — till November 8. The bank said the rates for both fresh home loans and balance transfers will now start at 6.50 per cent per annum. This rate is available across all loan amounts and is linked to the borrower’s credit profile.

The lender has been reducing its home loan rates gradually over the last few months to gain a sizeable market share in the segment. In October Last year, it was offering such loans starting at 6.9 per cent, which it reduced by 15 bps to 6.75 per cent in November, and followed it up with another 10 bps reduction in March to 6.65 per cent. The latest cute came on Thursday.

While there have been no rate cuts recently, there is excess liquidity in the system which is pulling the rates down in general, said experts.

According to Bankbazaar.com, State Bank of India, one of the largest players in the segment, has rates in the range of 6.7-7.3 per cent for a loan of over ~30 lakh. ICICI Bank’s rates range between 6.75 per cent and 7.45 per cent for a loan of the same amount, while Axis Bank’s rates are in the range of 6.98.55 per cent. Among large housing finance companies, HDFC is charging 6.75-7.9 per cent interest rate for a loan of over ~30 lakh. LIC Housing Finance’s home rates range from 6.66-7.8 per cent, while that of PNB Housing Finance are at 7.35-9.55 per cent.

Kotak Mahindra Bank said the demand for these loans has grown as consumers have realised the importance of owning a home. Corrections in property prices and attractive offers have also propelled the demand for such loans.