Housing Development Finance Corporation Limited (HDFC), India's largest housing finance company, has announced a 50 basis points reduction in its retail prime lending rate (RPLR) to 14%. The recent reduction will be effective from today (25th March). This is second time in last three months that the company has cut its benchmark lending rate.

 

The benefit of a cut in RPLR will pass on to all existing floating rate customers over the period of next three months, based on their respective reset dates. Borrowers will have now two alternative options: to reduce their monthly installments (EMIs) or to lower their number of installments. A half percentage point cut would result in an EMI reduction of Rs 34 for every Rs 1 lakh for a 20-year loan.

 

HDFC has attributed the cut in RPLR to a reduction in its cost of funds. As this cut is part of a special scheme, for new borrowers the existing rates offered by HDFC will continue. Borrowers who have borrowed in the current quarter of the financial year will be the biggest beneficiaries of the recent cut in RPLR.