The cuts begin: HDFC first bank to reduce home loan rate 0.25%

Despite the Reserve Bank of India (RBI) keeping key rates intact in the monetary policy, housing finance company HDFC today took the lead in announcing a reduction in its retail prime lending rates (RPLR) by 0.25 per cent (25 basis points) with effect from February 1, 2008.

The advantage of a cut in RPLR will accrue to all existing floating rate customers over the period of next three months based on their respective reset dates. For new home loan customers, HDFC’s rate of interest under the Adjustable Rate Home Loan (ARHL) will continue at 10.25 per cent per annum.

According to bankers, others are expected to follow suit.

On the rate cut, Renu Sud Karnad, Joint Managing Director, HDFC Ltd said: “We have been able to bring down our costs due to improved operational efficiency and good quality portfolio, and as always, have ensured that it translates into a benefit for customers. While we were able to offer our new customers a special rate of interest since June 2007 because of good liquidity conditions, our existing customers were not able to enjoy the benefit.”