HDFC reduces home loan rates by up to 45 bps

Taking a cue from banks, HDFC, the country’s largest mortgage lender, reduced its home loan rates by up to 45 basis points on Tuesday. Loans up to ~75 lakh will attract interest rate of 8.7 per cent per annum, while it will be 8.75 per cent for higher amounts, HDFC said in a statement. A woman applicant will get a discount of 0.05 per cent in interest rate. HDFC’s earlier benchmark rate was 9.1 per cent.

Taking a cue from banks, HDFC, the country’s largest mortgage lender, reduced its home loan rates by up to 45 bps on Tuesday.

Loans up to ~75 lakh will attract interest rate of 8.7 per cent per annum, while it will be 8.75 per cent for higher amounts, HDFC said in a statement. A woman applicant will get a discount of 0.05 per cent in interest rate.

HDFC's earlier benchmark rate was 9.1 per cent. The revised rates were effective from Tuesday. HDFC also cut the interest rate on deposits by 35-40 basis points across maturities in the past few weeks.

“Over the past couple of months we have seen a drop in our marginal costs of funds and as always HDFC has ensured that benefit is passed on to its customers,” said Renu Sud Karnad, managing director, HDFC.

Indiabulls Housing Finance, too, reduced the lending rate by up to 0.45 per cent.

Analysts said this was the effect of huge rate cuts at large banks. Banks first reduced their marginal cost of fundbased lending rate (MCLR) by 70-90 basis points and later tweaked rates for the MCLRlinked loans.

Private sector lender ICICI Bank had reduced home loan rate by 45 basis points to 8.65 per cent from 9.1 per cent earlier. It also brought down its one-year MCLR by 70 bps to 8.2 per cent from 8.9 per cent earlier.

Among banks, Corporation Bank, Bank of India and Punjab & Sind Bank slashed their lending rate on Tuesday.

Bank of India reduced its MCLRs up to 0.9 per cent. For one year, the MCLR is now 8.50 per cent, down 0.75 per cent. But, overnight MCLR has been reduced by 0.9 per cent to 8.1 per cent effective January 7.

Another public sector lender Punjab and Sind Bank lowered the one-year MCLR to 8.75 per cent, down by 0.8 per cent. At the same time, it also slashed the base rate or the minimum lending rate by 0.05 per cent to 9.70 per cent effective from Wednesday.

Corporation Bank also lowered its one-year MCLR rate by 0.7 per cent to 8.75 per cent.

According to Reserve Bank of India (RBI) data, the housing loan portfolio of banks rose by 15.6 per cent in the 12 months ended November 2016. Outstanding home loans stood at ~8,15,300 crore in November 2016. The pace of housing loan expansion has moderated from 18.6 per cent seen in the 12 months up to November 2015.

The reduction in lending rates may prompt increase in credit offtake which has moderated substantially putting burden on balance sheet of banks.

More banks are expected to cut the lending rate in the coming days. Even fixed deposit rates are expected to come down and announcement to this effect would be made in the next few days. HDFC’s profit on investment sales down Meawhile, HDFC said its profit on sale of investments declined to ~3 crore in the quarter ended December. Compared with this, the figure was ~57 crore in the corresponding quarter in the previous year, HDFC Ltd said in a regulatory filing to stock exchanges.

Income from dividend during the quarter increased to ~179 crore as against ~136 crore in the December quarter of the previous financial year, it said.

The mortgage firm sold ~15,201 crore of loans in the past 12 months, it added.