Kotak Mahindra Bank on Thursday announced a 0.15 percentage point cut in its lending rate in the highly competitive segment, offering mortgages from 6.50 per cent.

This is the bank’s lowest interest rate in more than a decade and one of the most competitive among rivals, its president for consumer assets, Ambuj Chandna told reporters in a virtual call.

The reduced home loan rate is a festive period offer available only for two months till November 8, and the lowest offering is for those having highest credit scores coming from the salaried segment.

In the past, its rivals which include HDFC and SBI, have responded to rate cuts by slashing their own offering and it would be interesting to see how they react this time.

Demand for the loans is back because of a greater interest in home buying triggered by the pandemic, which has caused both work and education to shift to the homes, and also a downward trend in home prices, Chandna said.

The aggressively priced home loans will be available for both fresh home loans and also to balance transfers.

There has been an uptrend in the balance transfers, where a home buyer already servicing a loan is shifting to the lender for a lower rate, he said, adding that such transfers are happening for loans taken from both non-bank lenders and also top-tier banks. The bank is able to cut the interest rate despite no rate cut from the policy side because of the excess liquidity in the system, he added.