There is good news for home buyers in India as interest rates on mortgage loans reached their lowest level in a decade, with several banks cutting lending rates in recent days.
For example, nationalized banks like the State Bank of India (SBI), HDFC Bank, ICICI Bank and Kotak Mahindra Bank have cut rates to their lowest level in 10 years. While the SBI and Kotak Mahindra were among the first to lower mortgage interest rates, HDFC and ICICI have followed suit in the recent past.
ICICI cut its interest rates to 6.7% on Friday, in line with the SBI’s decision of March 1, 2021, offering the starting rate of 6.7%.
The banks said the offer is valid until March 31 from now. Lenders also offer a mortgage processing fee waiver. Interestingly, borrowers with good credit and a good repayment history will benefit the most from the move.
The fall in interest rates comes as banks have faced liquidity problems. Excess cash is a drag on the bank’s bottom line as lenders also have to pay interest on savings account deposits. On the other hand, the Reserve Bank of India had cut repo rates by 200 basis points since March 2020 to 4% to boost the economy. The monetary authority pushed lenders to pass the benefit of lower rates on to consumers.