HDFC, ICICI Bank cut home loan rate by 0.15%

Competition heats up in the home loan business, with lenders reducing lending rates

Competition is heating up in the home loan business, with lenders reducing lending rates. It started with State Bank of India (SBI) reducing its rate by 15 basis points (bps) early this week. 

The country’s largest lender ICICI Bank slashed lending rate by 15 bps to 9.20 per cent for home loans up to Rs 75 lakh. Soon, mortgage lender HDFC followed with downward revision in rate by 15 bps. 

HDFC will charge 9.20 per cent rate for loans up to Rs 75 lakh and 9.30 per cent for those above Rs 75 lakh, effective November 4. 

With credit to industry remaining tepid, lenders have trained guns on the retail segment to grow their loan book. While loans to industry have grown by just 0.9 per cent in 12 months ended September, home loans have shown a robust 18 per cent growth. The outstanding stock of home loans by banks was Rs 8.05 lakh crore, according to Reserve Bank of India data. 

  

Home loans to salary earners and households — as a segment — has low rate of defaults. This gives banks comfort to expand business in this segment, bankers said. 

SBI had cut rate by 15 bps. For women borrowers, the new rate is 9.10 bps. The bank has waived all processing fees for loans during the festive season, ending December.

The reduction in home loan rate is linked to revision in marginal cost of funds-based lending rates (MCLR). SBI cut its MCLR one-year loan rate by 15 bps to 8.95 per cent at the start of this month.