Housing Development Finance Corporation (HDFC), India's largest mortgage lender, today reduced home loan rates by 10 basis points.
Interest on housing loans below Rs 30 lakh would now be 10.15 per cent, while for loans of more than Rs 30 lakh, the interest would be 10.4 per cent, HDFC said in a release. The fact that the Reserve Bank of India (RBI) cut the cash reserve ratio (CRR) by 200 basis points in the last one year resulted in a decline in the cost of funds for all lenders.
Keki Mistry, vice-chairman and chief executive of HDFC, said, "The entire benefit of the reduction in the cost of funds has been passed on to customers, including old customers." Interest on existing loans to NRIs had also been reduced, HDFC said.
Today's cut would reduce equated monthly instalments by Rs 7 per lakh on home loans for 20 years. "Over the past couple of months, we have seen a drop in CRR and a cut in the repo rate, which have resulted in our cost of funds declining at a portfolio level. And, as always, HDFC has ensured the benefit is passed on to existing customers by way of a reduction in RPLR (retail prime lending rate)," said Renu Sud Karnad, managing director.
"We have, over the last few months, also seen the measures taken by the government have improved sentiment. This would provide more confidence to customers wanting to buy houses," she added.
In its third quarterly monetary policy review, RBI had cut the repo rate and CRR by 25 basis points each, reducing these to 7.75 per cent and four per cent, respectively. While the cut in repo rate had immediate effect, the CRR cut would be effective February 9.
After RBI's rate cut, most public sector lenders had reduced their base rates. State Bank of India cut its base rate by five basis points to 9.7 per cent, the interest on home loans below Rs 30 lakh to 9.95 per cent and interest on loans above Rs 30 lakh to 10.1 per cent.