Mumbai: Most Indian housing finance companies will not cut lending rates in a hurry as the cost of funds is still high, officials said on Friday, after top mortgage firm Housing Development Finance Corp reduced rates.
HDFC cut its retail prime lending rate to 10.25%, effective from 1 February, it said in a statement on its website.
“My cost of funds have not come down. I have no plans to cut down my rates immediately. We are in touch with various banks who lend money to us, my cost of funds have to come down,” said M. Sivaraman, managing director, GIC Housing Finance Ltd.
Surinder Mohan, CFO, LIC Housing Finance Ltd, said: “We are already offering the lowest rates. We are reviewing the situation every month and if the cost of funds come down, then we pass it on to the consumers as more than 90% of our loans are on a floating rate basis.”
PNB Housing Finance Ltd plans to take a call on the rates issue after March.
“We’ll take a call after March because we need to see our net interest margin as of March. My average ticket size is much lower and so lot of effort is required in recovery....that adds to the cost in addition to the cost of funds,” said V.K. Khanna, managing director, PNB Housing Finance Ltd.
Allahbad Bank, meanwhile, is reviewing all rates, both on the liabilities and asset side.
“We are reviewing all rates, both on the liabilities and assets side, especially with respect to retail. We had started quoting concessional rates on home loans from November and have extended it until 31 March. We may regularise it,” said A.C. Mahajan, CMD, Allahabad Bank
“It’s a matter of days, not more than a week (before the decision is taken).”