NEW DELHI: As the financial year draws to a close, public and private banks have unleashed a rate cut war on the mortgage segment in order to strengthen their retail portfolios and stay competitive. Taking cues from SBI, Kotak Mahindra Bank and mortgage lender HDFC, private-sector lender ICICI Bank on Friday cut mortgage interest rates to 6.7%, the lowest in 10 years for home loans up to Rs 75 lakh. For loans over Rs 75 lakh, it is 6.75%.
The revised rates will apply until March 31. “We have seen a pick-up in consumer demand, who want to buy homes for their own consumption, in recent months. We believe the time has come for an individual to purchase their dream home, given the prevailing low interest rates, ”said Ravi Narayanan, Head-Secured Assets, ICICI Bank.
Other banks. also, have released limited time offers on home loans. While SBI, which controls a third of the home loan market, now offers home loans starting at 6.7 percent (previously 6.8 percent), Kotak says its offer is the lowest in the market at 6. 65 percent (6.75 percent earlier). Mortgage lender HDFC also cut its retail prime rate on home loans, on which its adjustable rate home loans are benchmarked, to 6.75%.
But, unlike SBI and Kotak, HDFC did not reduce lending rates for a limited period. Bankers say there has been a surge in demand for these loans despite a drop in general consumer confidence in a shrinking economy. These assets are more than ever perceived as attractive bets compared to risky corporate loans. After declining in the first half of 2020-2021, home loans were up nearly 9% year-on-year in November, compared to overall loan growth of 6%.
According to a report by Emkay Global Financial Services, systemic monthly mortgage disbursements in February peaked at Rs 75,000 crore vs. Rs 40,000 crore on average, mainly due to pent-up demand driven by interest rates. benign, attractive house prices and a change in customer behavior in favor of home ownership or larger homes. SBI leads the pack with a market share of almost 31%, followed by the HDFC group at 19% and ICICI at 13%.
9% growth in mortgage disbursements through November
6% growth in overall loan disbursements through November