ICICI Bank drops home loan rate to 6.7%

or loans above Rs 75 lakh, ICICI Bank is charging a rate of 6.75% or more. Much like SBI, ICICI Bank too is offering the revised rates till March 31.

Amid a rate war in the home loan space, private sector lender ICICI Bank on Friday announced a reduction in interest rates to 6.7% for loans of up to Rs 75 lakh. This is the lowest rate in 10 years at the bank and matches that of State Bank of India (SBI) which, on Monday, lowered the rate for borrowers with high credit scores. For loans above Rs 75 lakh, ICICI Bank is charging a rate of 6.75% or more. Much like SBI, ICICI Bank too is offering the revised rates till March 31.

The fight for market share in the home loan segment isn’t surprising given tepid demand from industry for credit. While Kotak Mahindra Bank lowered its starting home loan rate to 6.65%, Housing Development Finance Corporation (HDFC) said it would charge rates starting at 6.75% for loans of any amount. Analysts believe the cut in rates is temporary and timed to attract customers while the benefit from the cuts in stamp duty are available. However, if demand from companies remains week in the quarters ahead, banks might be compelled to under-cut each other to grow market share, they point out.

SBI chairman Dinesh Khara recently observed the bank intends to grow the home loan portfolio aggressively, doubling it to Rs 10 lakh crore in the next five years.

As at most banks, home loan interest rates at ICICI Bank vary on the basis of various parameters such as bureau scores, profile of customers and customer segments, among others.

Ravi Narayanan, head- secured assets, ICICI Bank, said demand from consumers wanting to buy homes to live in had seen a resurgence over the last few months. “We believe that with our completely digitised home loan process, including instant sanction for customers of any bank, everybody will find it immensely convenient to avail a home loan with us,”Naryanan said. ICICI Bank’s mortgage portfolio crossed the Rs 2-lakh-crore-mark in November 2020 and disbursements increased in Q3FY21 over Q2FY21. It now sources nearly one-third of new home loans digitally.The growth in the mortgage portfolio was also aided by the bank’s expansion of its footprint across the country, including tier 2, 3 and 4 cities.