HDFC reduces rates, provides Rs 30 lakh loan at 9.75%

Written by Markets Bureau | Mumbai | Updated: Jan 18 2009, 03:59am hrs
Taking on the special housing schemes launched by public sector banks, the largest housing finance lender Housing Development Finance Corporation (HDFC) has introduced a 'special disbursement offer' on its floating home loans with immediate effect and may continue for two months.

Under this special offer, loans up to Rs 30 lakh will be at 9.75% and loans above Rs 30 lakh will be at 10.75%. HDFC says the step follows the deposit rate cut by the mortgage lender by 0.50% to 0.75% on January 15, 2009.

This is a limited period offer for its new floating rate home loan customers while the loans under fixed rates catagory remains unchanged.

The public sector banks have recently launched special home loan package under which they are charging a fixed interest rate of 8.5% for loans upto Rs 5 lakh and 9.25% for loans between Rs 5 lakh-Rs 20 lakh. But, there is no relaxation in the norms for home loans above Rs 20 lakh.

Speaking to FE, Keki Mistri, vice-chairman & managing director, HDFC, said that the scheme was likely to be in force until the fiscal-end in case there is no change in the interest rate scenario. Denying the fact that this decision was taken by his organisation in response to the special housing loan package as announced by the public sector banks, Mistri said, "We have maintained that whenever our cost of fund comes down, we will lower our interest rate accordingly. And, with recent deposit rate cuts, our cost of fund was all set to come down and hence the scheme," said Mistri. Mistri said his organisation had no plan to go for capital raising or even approaching National Housing Bank for refinance for this offer in particular. HDFC has from time to time made special offers and this is one such offer, he said.

Prior to the special period offer announced on Friday, HDFC was charging 10.25% for loans up to Rs 20 lakh and 11.25 % for bigger loans.

HDFC expects the builders in select areas slashing their prices by 10-20 %, which coupled with lower interest rates should encourage more middle-income buyers to come to the market.