Banks lower their home loan rates to a ten year low

There is good news for the home buyers of India, as the interest rates on home loans have hit a decade low as several banks have slashed their lending rates in the last few days.

For instance, the nationalized banks like State Bank of India (SBI), HDFC Bank, ICICI Bank and Kotak Mahindra Bank have reduced their rates to a 10-year low level. While the SBI and Kotak Mahindra were among the first ones to cut the home loan interest rates, HDFC and ICICI have followed suit in the recent past.

ICICI has slashed its interest rates to 6.7 per cent on Friday in line with the SBI's March 1, 2021, move offering the starting rate of 6.7 per cent.

The banks have said that the offer is valid till March 31 as of now. The lenders are also offering a waiver on home loan processing fees. Interestingly, borrowers having a good credit score and repayment history will be benefitting the most from the move.

The cut in the interest rates comes as banks have been flushed with liquidity issues. Excess liquidity is a drag on the bank's bottom line as the lenders also have to pay interest on saving account deposits. On the other hand, the Reserve Bank of India had slashed the repo rates by a whopping 200 bps since March 2020 to 4 per cent to revive the economy. The monetary authority has been prodding the lenders to pass the rate cut benefit to the consumers.