HDFC unlikely to cut rates

Housing Development Finance Corporation (HDFC) today said it does not plan to cut home loan rates as of now, a senior company official said.

"There doesn't seem to be any change in the interest rate scenario to warrant a cut in interest rates (on home loans)," the official said.

"Before the (50 basis point) hike in cash reserve ratio (on July 31), we were toying with the idea of a cut in home loan rates, but decided against it due to the (CRR) hike," the official said.

On Friday, Bank of Baroda surprised the market when it cut interest rates on housing loans by up to 50 bps across the board effective Saturday.

In the case of floating rate loans up to Rs 20 lakh, BoB's home loan rates will range between 10 per cent and 11 per cent from 5 to 25 years. The rates would be between 10.25 per cent-11.50 per cent for loans more than Rs 20 lakh.

For fixed rate loans up to Rs 20 lakh, the rate would be between 11.25 per cent and 12.50 per cent for 5-15 year tenure and for more than Rs 20 lakh, they will vary from 11.50 per cent to 12.75 per cent.

Separately, a senior official at the State Bank of India said the country's largest bank also had no plans to lower home loan rates.

The Reserve Bank of India has steadily raised interest rates in the last 18-20 months in an attempt to cool down demand-side inflationary pressure in a buoyant economy.

The central bank has also been advising banks to re-balance their portfolios and cut exposure to housing and real estate sectors.

The concerns of overheating in these sectors have led the RBI to hike the provisioning norms and risk weights on segments, including housing loans. RBI hiked risk weights for home loan rates to 75 per cent from 50 per cent in the last financial year.

For commercial real estate, risk weight was increased to 150 per cent from 100 per cent.