Top banks cut rates, may boost home sales: Experts

Banks are cashing in on the spending rush ahead of festive season

Several banks like the State Bank of India (SBI), Kotak Mahindra, Bank of Baroda (BoB), Punjab National Bank (PNB), and HDFC are offering loans at record low interest rates to cash in on the spending rush ahead of the festive season.

SBI will charge home loan borrowers an interest of 6.7% based on their credit score, irrespective of the loan amount. The offers are available to all segments of borrowers irrespective of the profession of the borrower. The 6.70% home loan offer is also applicable to balance transfer cases.

Kotak Mahindra Bank has reduced its home loan interest rates by 15 basis points (bps) from 6.65% to 6.50%. This special rate is a limited period festive season offer beginning September 10 and ending November 8. BoB is offering a waiver of 0.25% in the existing applicable rates for home and car loans. In addition to that, the bank is also offering a waiver of processing fees in home loans. Now, home loan rates will start at 6.75% and car loan rates start at 7%.

PNB too has slashed the repo-based lending rate by 25 basis points (bps) to 6.55%.

HDFC announced a festive offer with home loans starting from 6.7%. This offer will be applicable to new applications irrespective of the amount or employment category. The special offer at 6.7% is for all loan slabs and for all customers with credit score of 800 and above.

Real estate experts feel that these interest rate cuts could be a major factor in boosting the home sales this festive season.

“It is an encouraging move by leading banks to slash interest rates especially during the onset of the festive season. Even now, a low-interest rate by reputable banks is bound to catapult unimaginable economic growth in the country as a result of enhanced consumption. The initiative will surely make homeownership affordable and viable for fence-sitters who can now plunge on the best opportunity to buy their dream home,” Vedanshu Kedia, director, Prescon Group said.

According to Cherag Ramakrishnan, managing director CR Realty, “Considering the auspicious festive season ahead, the timing of the reduction in interest rates by leading banks couldn’t have been better. The real estate market has seen decent sales this year and this reduction in interest rates would further help to keep up the sales momentum.”

Bhushan Nemlekar, director, Sumit Woods Ltd said, “The reduction in home loan rates by leading banks will help the demand side immensely. The real estate sector has benefited immensely from the record low home loan rates. Currently, the all-time low, sub-7% interest rates are encouraging consumers to proceed with their purchase and quickly close their transactions. Low interest rates also help enhance eligibility for home buyers thereby bringing more customers into the marketplace.”

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