Home loans to get chepaer in 2009

31 December 2008

Housing loans are expected to get cheaper as smaller housing finance companies join the ranks of major banks and housing finance companies to push loans below Rs20 lakh.

Housing finance companies will get access to cheaper funds with the National Housing Bank providing the special refinance fund from the Reserve Bank at 8 per cent interest rate.

The current normal refinance rate of NHB is between 9 and 9.5 per cent.

"The RBI refinance fund will be given to HFCs at 8 per cent. This refinance is meant for housing loans of up to Rs20 lakh," NHB chairman and managing director S Sridhar said in Kolkata on the sidelines of the inauguration of a counselling centre in Kolkata on the reverse mortgage scheme.

Major institutional lenders have agreed to lend at reduced rates from 1 January both through special schemes and subsidised lending.

Second-rung HFCs like Dewan Housing Finance Corporation (DHFL), GIC Housing Finance Company and DHFL Vysya Housing Finance among others, are now planning to reduce interest rates.