There’s good news for those who have been waiting for interest rates to drop in order to purchase a property - HDFC is expected to lower its rates this week, following similar initiatives by Bank of Baroda and IDBI.

With a fall in its cost of funds by 50 basis points, HDFC home loan rates would be cut accordingly. With a prevailing PLR (prime lending rate) of 14%, the bank’s cost of funds had risen to 8.75% between April and June this year, as against 6.9% that prevailed a year ago.

HDFC disbursed Rs.5, 645 crore in the quarter, up by 29% The HDFC Chairman, Deepak Parekh has projected a 26-27% increase in home loans in by the end of the second quarter.

Meanwhile, the Centre is considering a subsidized interest rate for the economically weaker sections and lower income groups who wish to purchase their own homes.

The policy, being drafted by the Ministry of Housing and Urban Poverty Alleviation would possibly include a five-year rebate on the interest on the loan.

Lower interest rates would be extended by designated public sector banks. A provision of Rs.30 crore has been made to meet the compensation the government would be extending to banks to cover the difference in the rates.