HDFC cuts home loan rate by 5 bps
The revised rate of 6.75% comes into effect today
Following in the wake of
State Bank of India (SBI) and Kotak Mahindra Bank, Housing Development Finance Corporation (HDFC) too announced a cut in its retail prime lending rate (RPLR) by five basis points (bps). The revised rate is 6.75 per cent for customers with high credit scores.
The revision will come into effect from Thursday, and the change is expected to benefit existing retail home loan customers, HDFC said in a statement. HDFC’S adjustable rate home loans are benchmarked to the RPLR.
On Monday, SBI slashed interest rate on home loans by 10 bps under a limited period offer till the end of the month. The revised rates will start from 6.70 per cent and will be linked to CIBIL credit scores.
Kotak Mahindra Bank, too, reduced its home loan interest rates by a 10 bps to 6.65 per cent. This is a special rate applicable till March 31 and is the lowest in the market.
Keki Mistry, HDFC’S vice-chairman and chief executive officer, said the company has passed the benefit of reduction in costs of funds to customers. However, executives with housing finance companies said there were the followers in the competition driven by interest rate. The liability structure of HFCS is different and cost of funds are high. HFCS work on efficiency and quality of service to have edge in business.
About future trajectory of interest rates, Mistry told a news outlet that he did not see much downside for rates going forward. Rates have declined over the past eight-nine months, and will bottom out by the end of this month, he said.
The Reserve Bank of India has maintained status quo on the key policy rate (repo rate), and interest rates are not expected to either rise or fall in the near term, executives at SBI said.
The interest rate reduction has helped to enhance demand for homes and financing. Kamal Khetan, CMD, Sunteck Realty, said: “Since the second week of February, we are seeing very good uptick due to rate cuts. We believe this will continue in the coming months. We are seeing exceptional growth in affordable housing’.” Many factors, apart from interest rates, have also played a part in boosting demand across segments like the reduction in stamp duty.
Niranjan Hiranandani, chairman of Hiranandani Communities, said lower rates, reduction in stamp duty and the pandemic have prompted people to buy larger homes.
Saloni Narayan, deputy managing director (retail business) at SBI, said a combination of factors — low rates, builders taking steps to clear inventory, and state governments reducing stamp duty — have ensured that this is the ideal time for taking a home loan.