Housing Development and Finance Corporation (HDFC), the country's largest housing sector lender, yesterday slashed its home loan rates by 50 basis points i.e. half a per cent.
Terming the reduction a special offer, HDFC officials said that such offers were typical of the financial year-end deals.
The biggest gainers this are those seeking to avail of loans between Rs 20 to Rs 30 lakh. After the first stimulus package the PS banks reduced the rates of all new home loans to 9.75 per cent for loans between Rs5 lakhs and Rs20 lakhs.
At present, State Bank of India (SBI), the country's largest bank, offers home loans above Rs20 lakh at 10.25 per cent and ICICI Bank at 12.50 per cent. Public sector banks currently offer home loans up to Rs5 lakh at 8.5 per cent and loans between Rs5 lakh and Rs20 lakh at 9.25 per cent.
Reduced cost of funds
HDFC has cited reduced cost of funds as a reason for bringing down the rates to this level. The housing development company has cut its deposits rate by.50 per cent to 0.75 per cent from 15 January, 2009.
On 2 January 2008 the government and the Reserve Bank of India announced a second stimulus package for the economy that includes a further easing of liquidity and liberalisation of various rules and regulations, to give a boost to spending and investment (See: Second stimulus aims at boosting spending, investment).
RBI had simultaneously cut key rates - for the fourth time in less than three months - and reduced the amount of funds banks need to set aside to free up cash and boost lending, ina bid to inject capital into banks.
The repurchase rate (Repo) was reduced by a percentage point to 5.5 per cent, and the reverse-repurchase rate to 4 per cent. The central bank also reduced the cash reserve ratio, or the proportion of deposits banks must hold in reserve.
At present, State Bank of India (SBI), the country's largest bank, offers home loans above Rs 20 lakh at 10.25 per cent and ICICI Bank at 12.50 per cent.
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