LIC Housing Finance has reduced interest rates on existing home loans consequent to a reduction in its cost of funds. The interest rates for existing customers would be reduced by 75 basis points on EMIs falling due on April 1, payable on May 1. The reduced rates will be the lowest in almost two years. Read the details below:

Interest rates on home loans of existing borrowers are also coming down. LIC Housing Finance Limited has announced a further cut in interest rates of 75 basis points for its existing home loan borrowers following a reduction in its cost of funds.

According to the company, interest rates for existing customers would be reduced on EMIs falling due on April 1, 2009, payable on May 1, 2009. “The reduced rates will be the lowest in almost two years,” it said.

This interest rate reduction is the second by LIC Housing in the past three months. The company had earlier reduced 75 basis points for its existing home loan borrowers on EMIs due from January 1, 2009. Customers say that banks and home loan companies were generally not very keen on reducing the rates for existing home loans. “They have been slashing rates for new customers while old customers are paying high interest rates. PSU banks had slashed rates to 8 per cent for new loans but existing customers are paying 2-3 per cent more,” said a banking source.

HDFC, the leader in the home loan segment, is yet to announce its second reduction in rates for existing borrowers. HDFC reduced its existing home loan rates by cutting its retail prime lending rates (RPLR) by 50 basis points with effect from December 22. The advantage of a cut in RPLR will accrue to all the existing floating rate customers over the period of next three months based on their respective reset dates. HDFC had recently announced a 150 basis-points cut in new loan rates under which amount up to Rs 30 lakh will have interest of 9.75 per cent and above Rs 30 lakh attract interest of 10.75 per cent per annum.

Source: Indian Express