HDFC cuts home loan rates for existing borrowers by 15 basis points

Rates for new loans were cut earlier this month

After reducing the interest for new home loan borrowers, housing finance major HDFC Ltd has extended the same benefit to its existing customers too. It reduced its retail prime lending rate (RPLR) by 15 basis points to 16.15 per cent from 16.30 per cent. 

Home loan rates are calculated by reducing the spread from the RPLR. HDFC is offering women borrowers, a rate of 8.65 per cent on loans up to Rs 75 lakh, which is RPLR minus 7.5 per cent. The spread varies depending on whether it is a women borrower and the loan amount.

Earlier this month, HDFC had reduced the home loan rates for new borrowers. On new loans, up to Rs 75 lakh, the rate for women borrowers is 8.65 per cent and for others it is 8.7 per cent. For loans above Rs 75 lakh the rate is 8.7 per cent for women borrowers and 8.75 for others. 

The reduction in the RPLR would be applicable on loans to Non-resident Indians and POI card holders as well, said a press release issued by HDFC on Thursday.  

Currently, Bank of Baroda is offering the lowest rate for home loans, starting at 8.35 per cent. But this rate is for customers who have a high credit score. State Bank of India’s home loan rates start at 8.6 per cent, while in case of ICICI Bank they start at 8.65 per cent.

“There is a rate war among lenders in the home loan segment, but the demand for fresh loans is restricted to the segment below Rs 40 lakh. In the larger ticket size segment, the demand is more for balance transfer and hence the competition among lenders to offer better rates”, says Gaurav Gupta, of Myloancare.in.

Some lenders even offer a marginally lower rate than card rates in case of balance transfers, he adds. While there is no pre-payment penalty, there are other charges such a processing fees and legal fees. Customers must keep this in mind and also the tenure left on their existing loan before transferring it.