HDFC cuts new home loan rates by 50 bps

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HDFC cuts new home loan rates by 50 bps

Renu Karnad, ED, HDFC, said it has reduced new home loans by 50 bps. "The home loan rate cut is for disbursements up to October." It will decide on continuation of rate cut post announcement of the credit policy.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS HDFC may cut home loan rates next week: Deepak Parekh HDFC BSE | NSE 29/05/12 Are Mutual Funds betting on HDFC?

Renu Karnad , ED, HDFC , said it has reduced new home loans by 50 bps. "The home loan rate cut is for disbursements up to October." It will decide on continuation of rate cut post announcement of the credit policy.

The said the decision has been taken in view of the lower cost of funds, the benefit of which are being passed on to the customers. The news that there won't be any further hike in interest rates would bring cheer to the housing market.

Excerpts of CNBC-TV18's exclusive interview with Renu Karnad:

Q: The announcement is that 50 basis point home loan cut and this is on new loans and a decision will be taken on existing loans in a short while, is that right?

A: Yes it is. It is disbursements upto October 31. We do expect, as you all know, there is always a credit policy in October, and we will then see whether we want to continue with it and also what we are going to do on the past loans. So this is for fresh loans, new loans and it's about a 0.5% reduction.

Q: Would it be fair to interpret this as a sign of rates now easing off particularly in the home loan category or even auto category. You mentioned the credit policy; is that your sense as a bank that the RBI might make some kind of rate cut move as well?

A: I certainly cannot predict what the RBI would do. I can only tell you that what we do will be based on what the RBI does.

I think as the market are today, we did think that it warranted a reduction because we thought that the cost of funds for us had come down. Basically our rate are based on what our cost of funds are and since they were easier, we thought we would pass on the benefit.

Q: How much have your costs of funds come down; by 50 bps or by more?

A: This is confidential.

Q: Some people would say that you could also be cutting rates because you are facing a slow down in loan growth; so this could be let me put it "a festival discount"?  

A: I should clarify one thing, we were never in a market share game and we are always very conscious of our bottomline, we are never in a topline game. So I think it's really based on our cost of funds and the fact that HDFC, as an entity, felt that we could afford to do this.

But again, as I said, it is only till October 31. In the event of any changes, we always have the option of changing it both ways up or down.