Kotak Mahindra Bank has announced a 10 basis points reduction in its home loan rates for a limited period. The private sector lender is offering 6.65 per cent to its customers, which it says is the lowest in the market.

The announcement came amid the State Bank of India (SBI) dropping interest rates on home loans by 10 basis points after which its revised interest rate stands at 6.70 per cent. The country’s largest bank had said that the new rates were based on the loan amount and the credit score of the borrower, and are available till March 31, 2021.

Kotak Bank which has been looking to ramp up its market share in the highly competitive home loan segment, said that customers will be able to avail themselves the loans for 6.65 per cent till March 31 as part of a special offer after the rate reduction.

Home loan rates are now at a 15-year low as the RBI has been maintaining an accommodative policy. Observers expect a positive response to the latest offer from Kotak Bank and it is felt that the lender could also wean away existing customers of other banks through balance transfer.

Interest rates are linked to the borrowers' credit score and the Loan to Value (LTV) ratio, Kotak Bank said. LTV is that portion of the property value which can be financed through an housing loan.

“We are delighted to offer consumers a special year-end bonus in the form of even lower interest rates,” its president for consumer assets Ambuj Chandna said.