For the second time in past three months, LIC Housing Finance Limited has announced a further cut in interest rates of 75 basis points for its existing home loan borrowers. LIC's housing loans rate cut follows a reduction in its cost of funds. The company said in a statement that, interest rates for existing customers would be reduced on EMIs falling due on April 1, 2009 and payable on May 1, 2009. According to the company, the reduced rates will be the lowest in almost two years.

 

Earlier, the company had reduced 75 basis points for its existing home loan borrowers on EMIs due from January 1, 2009. Several customers welcomed the rate cut for existing borrowers. According to them banks and home loan companies were generally not very keen on reducing the rates for existing home loans. Their complain seems to be justified as recently PSU banks had slashed rates to 8 per cent for new loans but existing customers are paying 2-3 per cent more.

 

Meanwhile, another major housing financer, HDFC, is yet to announce its second reduction in rates for existing borrowers. Earlier, HDFC has reduced its existing home loan rates by cutting its retail prime lending rates (RPLR) by 50 basis points with effect from December 22.