Even as home loan interest rates reach a 15-year low thanks to the RBI’s relaxed stance on liquidity, lenders assess loans uniquely, depending on borrowers’ risk profile and creditworthiness.
According to industry onlookers, credit scores have grown increasingly critical for borrowers, with some of India’s top lenders collecting different interest rates based on consumer categories. For example, at India’s most extensive lender, SBI, home loan prices were reduced to 6.7% on March 1. But this rate is feasible only for those with a CIBIL score of more than 800.
Credit agency scores are typically used to judge borrowers’ creditworthiness and are vital for obtaining loans, with some lenders providing lower interest rates to customers with greater scores.
While differential costing of loans has been around for some time, banks are now more dependent on separating riskier borrowers since the beginning of the Covid-19 pandemic that hindered cashflows and repayment abilities.
SBI borrowers with CIBIL scores between 700 and 750 will have to pay a higher interest rate of 6.9% on home loans, whereas those between the 751-800 range will be suitable for loans at 6.8%. These are rates appropriate to loans up to ₹75 lakh, and loanees have to pay interest in the range of 6.75-7% for loans between ₹75 lakh and ₹5 crores, depending on their credit rating.
Up from ₹4.84 trillion as of December 31, SBI’s home loan record reached ₹5 trillion in February, holding a 35% market share among all commercial banks. Its home loan spendings experienced a 23% year-on-year (y-o-y) increase in December.
A private sector bank announced an even cheaper home loan rate on the same day as SBI. Kotak Mahindra Bank reduced its home loan interest rate by 10 bps to 6.65%. Nevertheless, much like SBI, this low rate will only be suitable for loanees with a CIBIL score of over 800.
As of 31 December, the private sector bank’s home loans and loans against property (LAP) record stood at ₹49,977 crores and aggregated 22% of all consumer assets.