HDFC reduced its home loan rates by up to 0.45 per cent. Loans up to Rs 75 lakh will attract an interest rate of 8.7 per cent per annum, while it will be 8.75 per cent for higher amounts, HDFC said in a statement. A woman applicant will get a discount of 0.05 per cent in the interest rate.

HDFC's earlier benchmark rate was 9.1 per cent. The revised rates are effective from today. "Over the past couple of months we have seen a drop in our marginal costs of funds and as always HDFC has ensured that benefit is passed on to its customers," Renu Sud Karnad, Managing Director, HDFC told PTI.

Meanwhile, public sector lender Bank of India too announced a reduction in benchmark lending rate by up to 0.9 per cent. For one year, the MCLR, or marginal cost of funds based lending rate, is now 8.50 per cent, down 0.75 per cent. However, overnight MCLR has been reduced by 0.9 per cent to 8.1 per cent effective January 7.

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 per cent after spurt in deposits following demonetisation. On January 1, India's largest lender SBI had reduced the lending rate by a good 0.9 per cent after Prime Minister Narendra Modi in his new year eve address urged banks to focus on the needs of poor and middle classes.

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