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HDFC cuts loan, deposit rates

BS Banking Bureau

The Housing Development Finance Corporation (HDFC) on Thursday reduced its loan as well as deposit rates, and introduced two new products. It also created a new slab for loans up to Rs 200,000.

HDFC has cut its prime lending rate and deposit rates by an identical margin -- 50 basis points. Both the floating rate as well as fixed rate loans will now be priced at 12.5 per cent, down from 13 per cent, while the deposit rates will vary between 6.5 per cent and 9 per cent. The change in loan rate will be effective March 5 and deposit rates March 8.

"We have created a new slab for loans up to Rs 200,000 which is priced at 11.5 per cent for ten-year loans and 11.75 per cent for 15-year loans," HDFC chairman Deepak Parekh said.

It has introduced two new products -- a five-year loan priced at 10.75 per cent and a 10-year loan at 12.75 per cent -- irrespective of the quantum of amount.

"Taking into account the tax incentive (tax exemption on interest outgo up to Rs 150,000 per year), a high tax bracket customer, who has availed of the entire tax benefit on the interest cost, will pay an effective interest rate of around nine per cent," Parekh said.

Other housing finance companies such as SBI Homes, LIC Housing Finance and Dewan Housing Finance have decided to wait and watch the market before reducing interest rates on their housing loan products.

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