Marking Festive Season Kotak Mahindra Bank Cuts Home Loan Rates to Decade Low

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As the festive season starts this month, private lender Kotak Mahindra Bank announced that it has reduced its home loan interest rates by 15 basis points (bps) from 6.65% to 6.50% p.a. This special rate of 6.50% p.a. is a limited period festive season offer beginning 10th September and ending 8th November 2021. “Rates for both fresh home loans and balance transfers now start at 6.50% p.a., offering the best value to home buyers. This special rate is available across all loans amounts and is linked to a borrower’s credit profile," the lender said in a statement. “This is the lowest interest rate in more than a decade and one of the most competitive among rivals, its president for consumer assets. Kotak’s incredible 6.50% home loan interest rate now makes owning one’s dream home even more affordable,”Ambuj Chandna stated. In the past, its rivals which include HDFC and SBI, have responded to rate cuts by slashing their own offering and it would be interesting to see how they react this time. Demand for home loans is coming because of a greater interest in home buying triggered by the pandemic, which has caused both work and education to shift to the homes, and also a downward trend in home prices, Chandna added in the investor call. There has been an uptrend in the balance transfers, where a home buyer already servicing a loan is shifting to the lender for a lower rate, he said, adding that such transfers are happening for loans taken from both non-bank lenders and also top-tier banks. The bank is able to cut the interest rate despite no rate cut from the policy side because of the excess liquidity in the system, he said, making it clear that other retail segments including credit cards are also seeing good pick-up in credit. The bank's lowest rate offering had stood at 6.9 per cent last October, and had been cut twice since then to the current rate of 6.65 per cent. Chandna said over 15 per cent or a sizeable chunk of the customers fall in the lowest rate offering category. "Mortgages constitute over a fourth of the lender's overall book and home loans have been a focus area for the last one year. However, he declined to share any data on how the market share has increased over the last one year or also give target on how much they wish to sell during the limited period offer. The bank has not changed its underwriting standards for home loans and continues to follow the same practices," he said. From an asset quality perspective, Chandna said the bank's home loan book has performed very well over the last year and added that the lowest rate offering helps it get the best quality customers. Customers can apply for home loans online. With Kotak Digi Home Loans, home loan applicants can now apply for and receive an instant in-principle sanction letter along with their loan amount eligibility, the tenure of the loan, interest rate and EMI.