Housing finance cos rule out reduction in lending rates

HDFC says reduction in interest rate will depend on the cost of funds

Leading housing finance companies like HDFC and LIC Housing Finance today ruled out immediate reduction in their lending rates citing higher cost of funds.

"It (lending rate cut) is the function of cost of funds. When it comes down, we will pass on the same to customers," HDFC vice-chairman and chief executive Keki Mistry told reporters on the sidelines of an event.

The chief executive of LIC Housing Finance VK Sharma also expressed similar sentiment, saying "reduction in interest rate will depend on the cost of funds," and pointed out that banks have not reduced their interest rates.

On the expectation from the monetary policy, Mistry said he was not expecting any rate cut in the policy scheduled to be announced on May 3.

 He also said that despite higher interest rates, the demand for home loans was better last year compared to the previous three-four years.

"Additional tax benefit provided in the Budget will encourage more people to buy property," Mistry added.

The Budget has provided for an additional tax benefit of Rs 1 lakh in home loan segment over and above the existing tax benefit of Rs 1.5 lakh, if the value of the property is under Rs 25 lakh.

Meanwhile, LICHFC said it was receiving good response for its home loan scheme 'Bhagyalakshmi' targeted at women.

"In the last 2.5 months, we have sanctioned more than Rs 3,300 crore. Response from young generation ladies has been tremendous," Sharma said.