National Housing Bank (NHB) has cut its lending rate by 0.5 percentage point, a step that will result in reduction of cost for mortgage firms such as LIC Housing Finance and HDFC.
The Prime Lending Rate (PLR) has been cut from 10.5 per cent to 10 per cent with immediate effect, NHB Chairman and Managing Director R. V. Verma said.
“The decision has been taken keeping in view market condition, and also the need for supporting the industry and individual home buyer,” he said.
It would directly benefit all floating rate loans linked to PLR, he said, adding, it should further spur demand for individual housing loan.
NHB directly lends to housing finance companies, and provides refinance to entities related to the development of housing.
On an average, NHB accounts for 25-30 per cent of the resources raised by housing finance companies, and, in some cases, the share is as high as 60 per cent.
Last fiscal, the NHB disbursed loan to the tune of Rs.14,454 crore, registering an increase of 20 per cent over the previous fiscal.
The loan book size of the bank increased by about 26 per cent in 2011-12 to Rs.28,490 crore from Rs.22,543 crore in the previous fiscal.
