Kotak Mahindra Bank Hikes home loan interest rate by 5 basis points


The private lender has become the first bank to initiate an upward tweak after the Diwali festival.

Private lender Kotak Mahindra Bank on November 8, 2021, decided to hike its home loan interest rate by five basis points. Starting November 9, 2021, the bank will offer housing loans to its customers on 6.55% annual interest as against 6.50%.

For the uninitiated, one basis point is one hundredth of a percentage point.

Before public lender Union Bank of India brought home loan interest rate to 6.4%, offering the cheapest home loan in the market, Kotak Mahindra had that distinction when it cut home loan interest rates to 6.5%. Now, Kotak has become the first lender to initiate a hike in home loan interest rates after the Diwali festival.

“Earlier in September, KMBL (Kotak Mahindra Bank Ltd) had kick-started the festive season by introducing home loan interest rates beginning at 6.50% pa – a limited period festive season offer that ends today, November 8, 2021. Those applicants whose home loan request has been sanctioned by the bank by November 8 will be able to lock in the festive rate of 6.5% per annum, if the loan is disbursed by November 15,” the bank said in a statement.

The new rate home loan interest at Kotak is also valid for a limited period only— between November 9 2021, and December 9, 2021.

“Our special 60-day festive season offer has been deeply appreciated by home buyers, and we have seen very strong demand momentum, both in fresh cases and balance transfers. We are, hence, delighted to extend the good times for borrowers with a new home loan rate of 6.55%. This is a great opportunity for consumers to buy their dream home now,” said Ambuj Chandna, president-consumer assets, Kotak Mahindra Bank.

Kick-starting a festive bonanza, Kotak Mahindra Bank had announced a rate cut for home loans in September this year. Following the move by the lender, a large number of banks in India have reduced home loan interest rates.

The new rates by Kotak are applicable on all fresh loans and balance transfers. While there are no limitations on home loan amount or borrower type, the bank would, however, offer the best home loan interest rate to borrowers with a good credit score of 800 and above.

Typically, banks charge higher interest from self-employed applicants. They also charge higher interest on big-ticket home loans.

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Kotak cuts home loan rate to 6.5%

The reduction means home loans interest rates at the private lender are currently at an all-time low.

In a move that would further intensify the price cut war in the housing finance segment, private lender Kotak Mahindra has decided to cut home loan interest rates to 6.50% from 6.65% an annum, bringing it to an all-time low. The 15-basis point reduction in Kotak Mahindra home loan rates came into effect on September 10, 2021, and would end on November 8, 2021, post the Diwali festivities.

Aimed at cashing in on the ongoing festive season, the move by Kotak might also prompt similar action by its peers such as SBI and HDFC, two of the biggest home loan providers in India.

“As families get ready to welcome Ganesha into their homes, we are delighted to make it even easier to buy the home of one’s dream. Home Loans now at 6.50%. Wish everyone a happy festive season,” Uday Kotak, Chief Executive Officer (CEO), Kotak Mahindra Bank, said in a tweet.

In a statement issued on September 9, 2021, Mumbai headquartered Kotak Mahindra said the new interest rate would be applicable on fresh home loans as well as balance transfers and would be available for both the salaried and self-employed customer segments. Available across all loan amounts, the new rate will be linked to the borrower’s credit profile.

We are delighted to add to the festive cheer for millions of home buyers and help make their dream of owning their ideal home a reality. As the world has changed and we are spending more time at home, our lifestyles have also evolved. People are looking for comfortable residences where the entire family can work, entertain and spend quality time together. Kotak’s incredible 6.50% home loan interest rate now makes owning one’s dream home even more affordable,” Ambuj Chandna, president for consumer assets, Kotak Mahindra Bank, told the media in a virtual call.

Chandna attributed the spike in demand for home loans to the pandemic, “which has caused both work and education to shift to the homes, and also a downward trend in home prices”.

In October 2020, the lowest home loan interest rate at Kotak Mahindra stood at 6.90%, and has been slashed thrice to bring to the current level of 6.50%—a move that has helped the private lender acquire more customers than usual in the past one year and is likely to provide it an edge over its peers.

Ease of doing business in another aspect that has been helping the bank to improve its home loan book. Through Kotak Digi Home Loans, applicants are offered instant in-principle approval for home loans.

Customers can also apply for Kotak home loans by Kotak mobile banking app or Kotak net banking or visit Kotak branches—the bank has its branches in over 100 cities of India.

 


Kotak Mahindra Bank cuts home loan interest rate by another 15 bps

Private lender Kotak Mahindra Bank will charge 6.75% interest on home loans now.

November 4, 2020: Private lender Kotak Mahindra Bank has reduced home loan interest rates by another 15 basis points, after slashing rates last month. With the latest cut, housing loans at Kotak are now available at 6.75% annual interest. The move is likely to intensify competition in the home loan market, after it was initiated by public lender Union Bank, when it cut its home loan interest to 6.7%.  After Union Bank, Kotak is currently charging the lowest interest on housing loans. The reduced rates are also applicable on balance transfers.

The concessional rates will be offered to borrowers based on the nature of their employment, credit score and loan-to-value (LTV) ratio. However, those borrowers who wish to transfer their existing loans to Kotak, will be offered the lowest interest rate of 6.75%, irrespective of the nature of their employment.

For salaried employees, the bank will charge an interest between 6.75% and 8.30%, if the LTV ratio is less than 80%, depending on their credit score. The rates will vary from 6.85% to 8.35%, in case of an LTV of over 80% and up to 90%. From self-employed borrowers, Kotak will charge an interest between 6.85% and 8.40% if the LTV is less than 80%, depending on their credit score. In case the LTV is higher than 80% and up to 90%, the rate of interest will be 6.95% to 8.45%, again, depending on the credit score of the self-employed borrower.

For the uninitiated, LTV ratio is the portion of the property value that a bank can finance. This ratio is used by banks and housing finance companies to lower default risk. Almost all banks are currently offering housing loans at sub-7% interest with an aim to boost to consumer sentiment during the ongoing festive season.  In October 2020, India’s largest lender SBI lowered its interest rate to 6.9%.

Banks started the price reduction after the banking regulator RBI brought down the repo rate, at which it lends funds to scheduled banks in India, to 4%. After October 2019, all financial institutions in India have linked their home loans with the repo rate, as directed by the RBI. The new benchmark not only affords buyers more transparency but also better policy transmission.

 


Kotak Mahindra Bank cuts home loan interest rate to 6.90%

Private lender Kotak Mahindra Bank, on October 22, 2020, reduced its rates by up to 10 basis points, bringing home loans to 6.95%

October 23, 2020: Joining the league of financial institutions that are offering housing loans at sub-7% interest, in order to cash in on the festive season, private lender Kotak Mahindra Bank, on October 22, 2020, reduced its rates by up to 10 basis points. With the reduction, home loans at Kotak Mahindra are now available at 6.90% annual interest, for salaried borrowers. The new rates come into effect from October 21, 2020.

Considering that the lender offers a five bps concession on the prevalent interest rates to women borrowers, women applicants at Kotak Mahindra will be able to get home loans at an annual interest of 6.9%.

On the other hand, salaried borrowers who wanted to transfer their exiting home loans from other banks to Kotak Mahindra Bank, would also be offered loans at 6.9% interest, the bank said. For self-employed borrowers, the charges would vary from 7.5% to 7.10%.

The reduced rates are, however, available to borrowers with a credit score of over 750. For borrowers who have a credit score between 700 and 750, the bank will charge 7% annual interest. Recall here that credit scores are assigned by credit bureaus, based on a borrower’s banking/payment history, on a scale of 300 to 900.

See also: Nine assumptions that will harm a home buyer’s credit score

“Kotak Mahindra Bank announced that it has reduced its rate on home loans by a further 10 basis points to 6.9% per annum, with effect from October 21,” the bank said in a statement. The move by the private lender comes, a day after public lender and the country’s largest bank State Bank of India, announced a reduction of up to 25 basis points in its home loan rates. SBI home loan rates are now down to 6.9%.

 

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