Analysts said this decision on the part of the two housing finance companies is a fallout of the huge rate cut by large banks. Banks first reduced their Marginal Cost of Fund-based Lending Rate (MCLR) by 70-90 basis points and later tweaked rates for MCLR-linked loans.
Private sector lender ICICI Bank had reduced home loan rates by 45 basis points to 8.65 per cent from 9.1 per cent earlier. It also brought down its one year MCLR by 70 bps to 8.2 per cent from 8.9 per cent.
Renu Sud Karnad, Managing Director, HDFC Ltd said "Over the past couple of months, the company has seen a drop in its marginal cost of funds and, as always, HDFC has ensured that the benefit is passed on to its customers."
HDFC had also cut the interest rate on deposits by 35-40 basis points across maturities in past few weeks.
Ashwini Kumar, deputy managing director, Indiabulls Housing Finance said his company has seen a reduction of about 45 basis points in the cost of funds raised from banks, through securitization and from the money market. The entire benefit is being passed on to new borrowers.
There will also be reduction in rates for existing home loan customers. The ALCO (asset liability committee) will take decision soon, he said.
According to Reserve Bank of India data, the housing loan portfolio of banks rose by 15.6 per cent in the months to November 2016. Outstanding home loans stood at Rs 8,15,300 crore.