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MUMBAI, Dec. 31

ON the New Year eve, Housing Development Finance Corporation (HDFC) today decided to cut its retail prime lending rates by 50 basis points to 11.5 per cent from 12 per cent.

State Bank of India had already announced similar reduction in interest rates on housing loans. The new rates for both HDFC and SBI will be effective from January 1, 2002.

HDFC has also reduced the rates on fixed rate loans by 0.25 per cent. Besides, processing and administration fees for housing loans have also been reduced from 1.8 per cent to one per cent, HDFC said in a release here on Monday.

HDFC said it is passing on the lower cost of funds to the customers. This was possible following the restructuring of its liabilities and re-pricing its assets during the year, the release said.

In November, HDFC raised a five-year yen loan equivalent to $98 million at rates much lower than the cost of domestic borrowing.

HDFC is in the process of issuing fresh mortgage-backed securities shortly. As an off-balance sheet transaction, the securitisation route is an effective instrument for asset liability management, the release said.

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