HDFC cuts rates for existing borrowers [TOI 25-Mar-09]

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HDFC cuts rates for existing borrowers

TIMES NEWS NETWORK

New Delhi: After rate cuts that only benefited new customers, India’s largest housing finance company HDFC on Tuesday reduced its retail home loan rate by half a percentage point (50 basis points) only for existing borrowers. New home loan rates will continue to be at 9.50% for loans up to Rs 30 lakh and 10.50% for more than Rs 30 lakh.
HDFC was able to cut rates as its cost of funds has reduced in the last month. ‘‘We have been able to bring down costs by managing liabilities efficiently and repricing debt,’’ said joint MD Renu Sud Karnad.

Portfolio cost dips, so rate cut possible

New Delhi: Even as the HDFC on Tuesday decided to pass on some benefits of reduction in cost of funds to existing customers, joint MD Renu Sud Karnad said, ‘‘In the current environment, there is a gap between reduction in the marginal cost of funds (cost of raising fresh funds) and the portfolio cost (overall cost of funds). The marginal cost of borrowing had come down earlier this year and the same was passed on to new customers through HDFC’s special limited period offer at lower rates beginning at 9.5%,’’ she said.
Now that the portfolio cost has come down too, HDFC has ensured that the reduction is passed on to existing customers by way of a reduction in RPLR, she said.
The advantage of a cut in RPLR will accrue to all the existing floating rate customers over the next three months based on their respective reset dates. Similarly, the rates of interest on existing loans to NRIs will get reduced.
The recent cuts in policy rates by RBI has created adequate liquidity in the banking system, which had a positive impact on the cost of funds.