Home Loans Get Cheaper As HDFC Follows Banks In Slashing Rates
HDFC cuts home loan rates by 40-45 basis points, bringing them almost on par with SBI
Housing Development and Finance Corporation Ltd (HDFC) on Tuesday cut its home loan rates by 40-45 basis points, following lenders like State Bank of India and ICICI Bank, who have announced a steep reduction in rates since January 1.
According to a press release from the company, the interest rate stands reduced to 8.65 percent for women and 8.70 percent for others, for loans up to Rs 75 lakh.
For loans above Rs 75 lakh, the rate now stands at 8.70 percent for women, and 8.75 percent for others.
Prior to this reduction, HDFC, India’s largest housing finance company, had reduced its home loan rate by around 25 basis points to 9.10-9.15 percent between November and January.
On Sunday, SBI reduced its benchmark marginal cost of funds lending rate (MCLR) by 90 basis points to 8 percent with effect from January 1. It, however, increased the spread over MCLR that it charges for home loans.
HDFC’s home loan rate now stands five basis points above SBI’s rate.
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.Renu Sud Karnad, Managing Director, HDFC
Non banking finance companies (NBFC) derive their funds primarily from market borrowing and from banks. With the spurt in deposits after the withdrawal of Rs 500 and Rs 1,000 notes, the banking system has seen a surge in liquidity, giving NBFCs like HDFC access to cheaper funds.
Housing loans, generally one of the fastest growing products in the personal loan segment, have slowed somewhat on account of the cash crunch that emerged after demonetisation was announced.
At a press conference on Monday, SBI Chairman Arundhati Bhattacharya had said that for her bank, the growth rate in housing loans had fallen from 20 percent to around 16 percent after demonetisation. Across the banking sector, housing loans have risen by 18.6 percent year on year, compared to overall non-food credit which has grown 8.8 percent.
