HDFC Slashes Home Loan Rate By 0.05%
An employee holds up a smartphone displaying a HDFC mobile app (Photographer: Dhiraj Singh/Bloomberg)  

HDFC Slashes Home Loan Rate By 0.05%

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In line with the country's largest lender State Bank of India, Housing Development Finance Corporation Ltd. on Friday reduced the benchmark lending rate by 0.05 percent, a move that will bring down interest rate for existing as well new borrowers.

SBI earlier this week slashed in its external benchmark-based rate by 25 basis points to 7.80 percent from 8.05 percent.

"HDFC reduces its retail prime lending rate on housing loans, on which its adjustable rate home loans are benchmarked by 5 basis points with effect from Jan. 6, 2020," the mortgage lender said in a statement.

New rates will now range between 8.20 percent and 9 percent, and the change will benefit all existing customers, it said.

The rate cut by lenders come despite the RBI keeping its benchmark repo rate unchanged at 5.15 percent in December monetary policy review.

During the interaction with media after the announcement of monetary policy on Dec. 5, RBI Governor Shaktikanta Das had said that although it is not in a hurry to keep reducing interest rates, the central bank would work to ensure that transmission turns more effective since much needs to be passed on.

While the RBI had cut repo rates by 135 bps in five policy reviews in 2019, the one-year median MCLR has declined by only 49 basis points. The weighted average lending rate on fresh rupee loans sanctioned by banks declined by only 44 basis points.

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