A flood of money from Mint Street is helping to lower interest rates and is causing lenders to do whatever it takes to attract a relatively safe group of borrowers to cushion a Covid blow to asset quality.
State Bank of India, Kotak Mahindra Bank, Punjab National Bank, Bank of Baroda are among the banks that have cut mortgage rates by 15-60 basis points to 6.5-6.7% – the lowest level in a decade.
Kotak Bank cut rates to 6.5% – the lowest in the industry – from September 10th to November 8th on all loan amounts, new loans and balance transfer cases as the bank seeks to increase its market share and increase book volume.
SBI offers 6.7% home loans regardless of borrower’s size or occupation, to which reduced interest rates are typically tied. The bank also waives processing fees for home loans.
The majority of potential homebuyers want to buy a property for their own use as their main reason in the next three months, as shown by a recent JLL RoofandFloor survey. Experts assume that the reduced lending rates under these circumstances will stimulate the sale of residential real estate if real estate prices remain stable.
India’s largest private bank HDFC Bank is working with fintech companies to extend the reach of their credit cards during these three months.
The rate cuts are compounded by Treasury Secretary Nirmala Sitharaman’s recent instruction to state banks to accelerate lending and launch lending programs across India from October. “We will likely see significantly improved traction in the residential segment during this period,” Anuj Puri, chairman of the Anarock Group, told ET.
Recent research shows that the highest demand right now is in the premium segment, where properties are priced at Rs 80 lakh and up, he added.
“The continued recovery and resilience shown during the second wave of Covid-19 are indicative of a fundamental shift in sentiment towards home ownership,” said Sriram Krishnaswamy, COO, RoofandFloor.
With the return of outreach programs, the flow of credit into the productive sectors is likely to increase. Some experts believe developers could see record sales bookings in the second half of FY22.