Competitive home loan rates by banks could further boost the demand for home loans.
Private sector lender Kotak Mahindra Bank, which is offering one of the lowest interest rates, is keen on acquiring good quality customers in the home loan segment.
“Our cost of funds has gone down apart from the policy rates. We have very competitive cost of funds. Also, home loan is one of the best asset categories. It is a relatively safer, long-term product,” said Shanti Ekambaram, Group President, Consumer Banking, Kotak Mahindra Bank.
Speaking to BusinessLine, she said there is a lot of demand across the spectrum as “deals being offered by the eco-system as a whole are very interesting”.
“We are seeing a lot of demand across the top five to six metros,” she said.
The bank had on Tuesday reduced home loan interest rates by another 15 basis points to 6.75 per cent. Bank of Baroda has a lending rate of 6.85 per cent and others like State Bank of India are offering home loans at 6.9 per cent for an amount of up to ₹30 lakh and 7 per cent for above ₹30 lakh.
Kotak Mahindra Bank had late last month cut the rate to 6.9 per cent.
“We are seeing demand for home loans for several reasons –prices are attractive because builders are putting on ready inventory which they are willing to cut at very attractive prices. Rates are at historic lows. In states like Maharashtra, stamp duties are down three per cent upto December and another two per cent March, so it is very attractive. Also with work from home, families are looking for larger spaces where everybody needs a room,” she said.
Demand recovery
Recently, HDFC CEO and Vice-Chairman Keki Mistry too had highlighted the sharp recovery in demand. Home loan disbursements by HDFC in October were the second highest it had seen in its history.
“I believe this is the best time for a person to buy a house due to the low interest rates, lower stamp duty in some States as well as discounts being offered by some developers,” he had told reporters after the second quarter results.
A recent report by 99acres.com said home buying sentiment improved in the July to September quarter as public sector banks and private players slashed home loan interest rates to a 15-year low. “This, along with resumption of construction work, helped take the enquiries up by 80 percent of the pre-Covid times,” the report said.
“In the ensuing quarter, the festive season and the competitive home loan interest rates are expected to be the major propellers for the market,” it further said.
The gradual recovery in the Indian residential sector, post the Covid-19 outbreak, was evident from the sale of about 33,000 units in July-Sepember 2020; 2.5 times of the sales reported in April-June 2020, that is 9,700 units. Mumbai and Delhi led other metro cities in terms of sales volume and constituted about 29 percent and 22 percent of the total transactions, respectively, it further said.