Loans cheapest in 6 years: HDFC, Bank of India cut lending rates by up to 0.9%, Indiabulls follows suit

New Delhi:  Housing, auto and corporate loans are all set to become cheaper with several PSU and private banks steeply reducing benchmark lending rate by up to 1.48 percent after spurt in deposits following demonetisation.

Country's largest mortgage lender HDFC on Tuesday reduced its home loan rates by up to 0.45 percent.

Loans up to Rs 75 lakh will attract interest rate of 8.7 percent per annum, while it will be 8.75 percent for higher amounts, HDFC said in a statement. A woman applicant will get a discount of 0.05 percent in interest rate.

Meanwhile, public sector lender Bank of India too announced reduction in benchmark lending rate by up to 0.9 percent.

For one year, the MCLR, or marginal cost of funds based lending rate, is now 8.50 percent, down 0.75 percent.

However, overnight MCLR has been reduced by 0.9 percent to 8.1 percent effective January 7.

Indiabulls Housing Finance (IBHFL) today also reduced its home loan rates by 45 basis points, bringing it down to lowest in six years.

As per the revised rates, applicable from today, the interest rate on loans up to Rs 75 lakh is 8.7 percent.

The reduction in lending rates may prompt increase in credit offtake which has moderated substantially putting burden on balance sheet of banks.

Home loan rate for ICICI Bank will come down between 0.45 and 0.6 percent depending on quantum and category. Another private sector Kotak Mahindra Bank too reduced the MCLR rate by up to 0.45 percent.

As far as the youngest Bandhan Bank is concerned, it has cut its MCLR by 1.48 percent to 10.52 percent.

On January 1, the country's largest lender SBI along with PNB and Union Bank of India, slashed lending rates by up to 0.9 percent after Prime Minister Narendra Modi in his new year eve address urged the banks to focus on the needs of poor and lower middle class and middle class.

Following the reduction, lending rate of SBI for a one-year loan has came down to 8 per cent from 8.90 percent.