The premier housing finance company reduced its retail prime lending rate(RPLR) by 25 basis points to 12.50 per cent. Consequently, all floating rateloans -- linked to RPLR -- will be priced at 12.50 per cent.

The institution's fixed-rate home loans are now pegged at 13 per cent, downfrom 13.25 per cent. The new rates will take effect from May 8.

Despite the rate cut, home loans by ICICI are still cheaper than that of thehousing finance major. ICICI offers one-five year loans to resident Indiansat 11.25 per cent, six to 20 year loans 12.75 per cent and 21-3- year loans12.85 per cent. In effect, HDFC's 15-year fixed rate loan is 25 basis pointscostlier than the comparable maturity fixed rate loan of ICICI. The termlending institution does not offer floating rate loan.

HDFC has reduced its home loans for NRIs also. It will now charge 11.50 percent interest on fixed rate loans up to five years and 12.50 per cent on sixto 10 year NRI loans. Floating rate loans in this segment are priced at 11per cent and 12 per cent, respectively.

At ICICI, the fixed-rate loans for non-resident Indians are pegged at 11.25per cent at the short end (one-five years) and 12.25 per cent at the mediumend (six-seven years).

An HDFC release said: "The revised rates of interest will apply to new loansand loans which are aproved, but not yet disbursed. The reduction ininterest rates coupled with income tax benefits with respect to repayment ofprincipal up to Rs 20,000 per annum enhanced from Rs 10,000 per annum in(the finance bill 2000) and interest payments up to Rs 1,00,000 per annum(enhanced from Rs 75,000 in the Finance Bill, 2000) offer substantialbenefits to borrowers and will encourage individuals to acquire homes."