The housing finance outfit of General Insurance Corporation of India (GIC), GIC Housing Finance Ltd (GICHFL), has slashed its housing loan interest rate to an all-time low of 7.95 per cent, even as it chases a steep loan sanction target of Rs. 1,000 crore for 2009-10.

Till date, its loan sanction has been only about Rs. 450 crore, while disbursement is Rs. 350 crore against an annual target of Rs. 800 crore.

Sources told The Hindu that it was sending 1.5 crore mobile text messages to hawk the festival scheme, which opens on October 1, for a month.

However, indications are that it may remain open for a while, if an encouraging response is generated.

At present, GICHFL offers an interest rate of 8.5 per cent for six months on loans up to Rs. 30 lakh.

The current offering is the lowest in its 15-year history. “The signs of a recovery are evident and the next two quarters are expected to be better than those of 2007-08,” sources said.

However, while this would be the cheapest offer in the six month time-band with freebies like accidental death cover and property insurance cover, the company is also launching a scheme offering interest rate of 8.95 per cent which remains fixed for two years.

GICHFL’s average loan size is less than Rs. 10 lakh and the Centre’s proposed scheme of providing an interest subsidy of one percentage point for this bracket of loans brings down the effective rate to 6.95 per cent per annum.

Although a relatively small player in the housing finance market, GICHFL has a comfortable solvency position with a capital adequacy ratio of 17.5 per cent against the 12 per cent stipulated by the National Housing Bank.

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