There are good tidings for home buyers. Indicating that interest rates could be heading for a decline, HDFC Ltd, the leading player in the home loan segment, today reduced interest rates on floating housing loans by 0.50 percentage points to 10.50 per cent. The change comes into immediate effect.
This reduction will be on fresh loans and applicable to all disbursements up to October 31. However, there is no change in the fixed home loans rate, which remains at 13.25 per cent.
Commenting on this initiative, Renu Sud Karnad, executive director, HDFC Ltd, said,
"Our lending rates are a function of our cost of funds and we have seen a reduction in our cost of funds."
"With HDFC cutting the rates, other banks are likely to follow suit. HDFC and other banks are likely to take a firm view on rates after the RBI credit policy in October," said a banker. The rate cut comes after HDFC chairman Deepak Parekh said on September 21 that the funding costs have come down. Parekh had said he expected loan growth in the second quarter of this fiscal at 26-27 per cent for HDFC and 20-25 per cent for the whole fiscal. "Property prices have softened, sales have slowed down and the investor is out of the system," he had said.
