With the economy on the comeback trail and the home buying market expected to stage a growth in the forthcoming festival season, lenders are racing to woo home loan customers with interest rate cuts. Although the Reserve Bank of India (RBI) has kept the policy rates unchanged at four per cent in the last seven review meetings, banks led by State Bank of India, Kotak Mahindra, PNB and others last week slashed the home loan rates, triggering a competition among banks to woo customers.
SBI, which has a home loan portfolio of Rs 5.05 lakh crore, has now offered credit score linked home loans at 6.70 per cent, irrespective of the loan amount. The offer results in a saving of 45 bps which translates to a huge interest saving of more than Rs 8 lakh, for a Rs 75 lakh loan with a 30-year tenure, the bank says. The home loan outstanding of the banking sector has shown a growth rate of 8.9 per cent to Rs 14.66 lakh crore as of July 2021 as against Rs 13.46 lakh crore a year ago, indicating that banks disbursed around Rs 120,000 crore as home loans during the 12-month period despite the uncertainties created by the Covid pandemic. The home loan segment is considered the safest area for bank lending with minimal non-performing assets.