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INDIA BUSINESS WORLD - 16th March To 31st March - 2009
HDFC CUTS RATES FOR EXISTING CUSTOMERS
HDFC, the country’s largest housing finance company, has announced a 50 basis point reduction in its retail prime lending rate (RPLR) to 14%. This is the second time in three months that the institution has cut lending rates.
The advantage of a cut in RPLR will accrue to all existing floating rate customers over the next three months based on their respective reset dates. Borrowers will have the choice of either reducing their EMIs or the number of installments. A half percentage point cut would result in an EMI reduction of Rs 34 for every Rs 1-lakh loan for 20 years. HDFC has attributed the cut to a reduction in its cost of funds. For new borrowers, the existing rates offered by HDFC will continue as these are part of a special scheme.
"In the current environment, there is a time gap between reduction in the marginal cost of funds and portfolio cost. The marginal cost of borrowing had come down earlier this year and the same was passed on to our new customers through our special limited period offer (rates beginning at 9.5%). We are now seeing a reduction in the costs on a portfolio level, and as in the past, HDFC has ensured that this is passed onto existing customers by way of a reduction in RPLR,” said HDFC joint MD Renu Sud Karnad.
Last quarter, there were signs of an incipient slowdown in home loans as the financial crisis increased uncertainty over jobs and raised hopes that real estate would become more affordable.
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