Taking a cue from the country?s biggest home loan company HDFC, two state-owned banks on Tuesday slashed interest rates on housing loans.

Bangalore-based Canara Bank has pared home loan rates by 25 basis points across all segments while Kolkata-based Allahabad Bank announced a cut of up to 1% on housing and car loans.

Canara Bank’s rate cut will come into effect from Thursday and be applicable to existing as well as new housing loans, irrespective of the loan amount and for all tenures up to 25 years.

The revised rates for loans up to Rs 20 lakh will be 10% for five-year term, 10.25% for 10 years and 10.50% for loans above 10 and up to 25 years. For loans above Rs 20 lakh, it will be 10.25% for five years, 10.50% for 10 years and 10.75% for above 10 years and up to 25 years.

Allahabad Bank will effect the reduction from February 10 and has also revised interest rates on fixed deposits of certain maturities by 1%. The lending rates on retail credit has been reduced by 0.5% to 1% for housing, consumer durables, car and education loans, Allahabad Bank said in a communication to the BSE.

In home loans, the interest rates have been reduced by 0.5% to 0.75 % across the board in all tenure brackets, while interest rates on car and consumer durables loan has been cut by 1% in all categories, it said. The reduction is applicable to new loans in both the categories, floating and fixed rates, the bank added.

At the same time, education loan has also been made softer with a cut in the interest rates by 0.25 to 1%.

Meanwhile, Vijaya Bank CMD Prakash P Mallya told FE that there was no further need on its part to cut home loans rates.

ICICI Bank keeps option open

The country’s second largest lender, ICICI Bank, has kept its options open for an interest rate cut. The bank is waiting and watching the market before taking any step in this direction.

Talking to reporters on the sidelines of CII CFO Summit in Mumbai on Tuesday , KV Kamath, managing director and CEO of the bank, said, ?We have to see the demand-supply gap before taking any decision on the issue. ? However, he maintained that his bank was constantly keeping an eye on the market.