Taking a cue from other lenders, private sector lender ICICI Bank, which is one of the biggest players in the home loan business, has reduced interest rates on such loans to 6.7 per cent, effective immediately. But, customers can only avail of this benefit up to the end of this month (March 31, 2021). The bank was charging an interest rate of 6.8 per cent prior to this cut.
This is the lowest rate charged by the bank for home loans in the last 10 years. Customers can avail of this interest rate for home loans up to Rs 75 lakh. And, for loans above Rs 75 lakh, interest rates are pegged at 6.75 per cent onwards.
“We see a resurgence in demand from consumers, who want to buy homes for their own consumption, in the past few months. We believe that this is an opportune time for an individual to buy his/her dream home, considering the prevailing low-interest rates”, said Ravi Narayanan, head- Secured Assets, ICICI Bank.
Recently, many big lenders slashed interest rates in the home loan portfolio to cash in on the customer demand for such loans. The country’s largest mortgage lender, Housing Finance Development Corporation (HDFC), announced a cut in its retail prime lending rate (RPLR) of 5 basis points (bps). The revised rate is 6.75 per cent for customers with high credit scores.
State Bank of India (SBI), the largest lender in the country, also slashed the interest rates on home loans by 10 bps under a limited period offer till the end of the month. The revised rates will start from 6.70 per cent and will be linked to CIBIL credit scores.
Another private lender, Kotak Mahindra Bank, too, reduced its home loan interest rates by 10 bps to 6.65 per cent. This is a special rate applicable till March 31 and is the lowest in the market.
Home loan rates currently prevalent in the market are the lowest in 10 years. Although credit uptake has grown at a tepid pace, the home loan segment has done exceedingly well. And, this gives an impetus to lenders to be aggressive in the segment as default rates are quite low and there is a constant demand. And, banks, as well as housing finance companies, are locked in an intense battle to gain market share in this segment.
The demand for such loans among consumers is aided by a desire among youth to own homes early in life, rising incomes, and government policies like the cuts in stamp duty and subsidy.
A few months ago, ICICI Bank became the first private sector lender to cross Rs. 2trillion mark in the mortgage loan portfolio. Also, in December of Q3, it saw the highest ever disbursement in the portfolio. Similarly, SBI’s home loan portfolio touched Rs 5 trillion last month and it is planning to double the portfolio in the next five years.