Lenders led by mortgage players HDFC and LIC Housing Finance today announced a reduction in interest rates, with banks, including ICICI Bank, expected to follow suit over the next few weeks.
HDFC today announced a 50 basis point reduction in lending and deposit rates for its existing and new customers.
With this, HDFC’s retail prime lending rate fell 50 basis points to 14.50 per cent. Following the move, to be effective from Monday, floating rate home loans up to Rs 20 lakh will be 150 basis points lower at 10.25 per cent, while loans above Rs 20 lakh will cost 11.25 per cent a year, which is 50 basis points lower than the existing rate.
The company also announced a cut in its NRI advances.
“We have been able to bring down our costs due to improved operational efficiency and good quality portfolio,” HDFC’s Joint Managing Director Renu Sud Karnad said.
ICICI Bank, the country’s largest private sector lender, indicated it would lower lending rates by at least 50 basis points but the reduction is expected only around February.
LIC Housing Finance, the second largest mortgage company, said it would cut its offer rate by 175 basis points to 9.75 per cent for loans up to Rs 20 lakh with a tenure of more than five years. For similar loans up to Rs 5 lakh, the offer rates will be reduced by 225 basis points to 9.25 per cent. These offer rates will be effective for the first three months and after that the interest rates will be reset and linked to the benchmark prime lending rate (BPLR).
