Kotak Mahindra Bank has said it sees a shift from staying in rental accommodations to owning homes during the pandemic period due to price correction and lower interest rates.
The bank has announced a cut in their home loan interest rates to 6.5 percent, which is an all-time low. This, of course, is on a limited-time basis for the festive season and the special rate is available for both fresh home loans as well as balanced transfers, irrespective of the ticket size, but it is linked to the borrower's credit profile.
CNBC-TV18 caught up with Ambuj Chandna, President-consumer assets of the bank, to discuss about this development.
Talking about the broad trends in the housing industry in general, Chandna said pre-pandemic saw a big shift towards owning own homes from consumers, largely driven by two or three factors. First was work from home and school from home, which meant people needed bigger homes. Second, there was a shift from rental to owning a house, largely driven by the correction in home prices and lower interest rates. "With that, we saw a big shift during the pandemic period."
"Importantly, this shift continues," he said, adding "that they had a bit of bump during the first quarter due to the second COVID wave, but this quarter looks to be back and we are expecting the festive season to be pretty buoyant, largely driven by the auspiciousness of home buying."
“At Kotak, we believe this is a good time for us to give a great offer to our consumers and these interest rates would help us strengthen our hold in the housing business,” specified Chandna.
He also said that the bank is currently offering home loans at the lowest interest rates.
When asked which micro markets were doing the best, he said it is broad-based. There are micro-markets like Pune, Thane, Hyderabad, and Ahmedabad, which stand ahead in the pack. But the general trend is broad-based and these three-four markets are doing better than the rest, he added.
When asked what was their expectation of home loan growth rates and and how would they compare it to before? Do they expect net interest margins to decline or moderate due to this cut in home loan rates?
Chandna said, "We are pretty bullish about the home loans as a segment. It has done well for us. In fact, we started correcting our rates in October last year. Since then, we've seen four corrections in our rate, we started from way to 6.9 percent and 6.75 percent, 6.65 percent, and now 6.5 percent. Every time we've taken the view to add more value to our consumers and offer attractive rates it has helped us and build up volumes and we expect that to continue.”
“Our margins are pretty stable. In fact, our CASA ratio is at 60 percent and one of the best in the industry. So I don't see issues and margins from here. The whole idea here is to be able to offer good value to consumers and to consolidate our position in the home loan.”
For the full interview, watch the accompanying video