SBI, Kotak Mahindra come out with home loan festival offers: Check details

Home loan interest rates are in news as efforts get underway to generate demand in real estate with which the fate of a few crucial segments such as iron and steel, cement, paints and home décor are entwined. On September 16, the country’s largest lender State Bank of India (SBI) announced it is offering credit score linked home loans at just 6.70% irrespective of the loan amount. A couple of days ago, private lender Kotak Mahindra Bank also slashed the interest rate and offer lowest ever interest rate, i.e. 6.50%. The main aim is to make home loans more affordable in the festive season.

Despite the impact of the Covid-19 pandemic, the home loan segment has witnessed a robust 9.6% YoY growth in the first three quarter of fiscal year 2020-21. And after the second wave, many private and public lenders slashed rates to lure prospective home buyers.

Money9 gives you a comparison study among all investors who are offering the nine cheapest home loans.

Savings of Rs 8 lakh

SBI’s offer is a first of its kind in the industry. Earlier a borrower availing a loan greater than Rs 75 lakh had to pay an interest rate of 7.15%. With the introduction of the festive offers, a borrower can now avail home loan for any amount at a rate as low as 6.70%, SBI said.

The offer results in a saving of 45 basis points which translates to a huge saving of more than Rs 8 lakh on interest cost, for Rs 75 lakh loan with a 30-year tenure, read the SBI statement.

Further, the rate of interest applicable for a non-salaried borrower was 15 basis points higher than the interest rate applicable to a salaried borrower. SBI has removed this distinction between a salaried and a non-salaried borrower. Now, there is no occupation-linked interest premium being charged to prospective home loan borrowers. This would lead to a further interest saving of 15 basis points to non-salaried borrowers.

To welcome the festivities and boost market sentiments, the lender has waived off processing fees completely and this offer is also applicable to balance transfer cases.

Kotak Mahindra Bank

Private lender Kotak Mahindra Bank (KMB) offers the cheapest home loan at 6.50% per annum. KMB has started the festive season by announcing the reduction in home loan interest rate by a further 15 basis points to 6.50% per annum. The announcement was made last week.

This special rate of 6.5% is for a limited period and is ending on November 8, 2021. With this announcement, KMB continues to offer most competitive interest rates in the home loan industry.

This special offer is applicable for both fresh home loans and balance transfers, said the bank.

Other lenders

Besides SBI and KMB, some other lenders offer home loans with interest rates between 6.60% and 6.80%.

PSBs such as Punjab & Sind bank, Bank of Baroda and PNB offer home loan at 6.65%, 6.75% and 6.80% respectively. LIC Housing Finance has interest rate of 6.66%.

Private lenders ICICI Bank, HDFC Bank and NBFC Bajaj Finserv offer interest rate of 6.75%.

The market

Total outstanding home loan stood at Rs 22.26 lakh crore as of December 2020, as compared to Rs 20.31 lakh crore as of December 2019, according to a report released by credit information bureau CRIF High Mark.

In the affordable housing segment, ticket size up to Rs 35 lakh constituted about 90% of the market by volume and nearly 60% by value as of December 2020.