"Hudco has reduced its rate of interest on project loan by 50 basis points and individual home loan (Hudco Niwas) between 100 and 125 basis points for loans up to Rs 20 lakh for floating rate of interest," it said in a statement.

Hudco chairman and managing director K L Dhingra announced the revised rates of interest and said they would be effective from January 1, 2009, according to the statement.

For home loans up to five years, the interest rate has been lowered to 10.25 per cent from 11.50 per cent, a cut of 125 basis points, a senior official of the housing and infrastructure lender said.

For home loans with payback period beyond five years, the interest rates have been cut by 100 bps to 10.75 per cent from 11.75 per cent.

Though there has been no change in rates for Hudco's lending to private commercial sector, interest rates for project loans to government sector has been cut by 50 basis points.

LIC [Get Quote] Housing slashes lending rates

Following a cut in home loan rates by leading banks, LIC Housing Finance on Wednesday cut interest rates for existing home loan borrowers by 0.75 per cent with effect from January 1.

The reduction is on EMIs falling due on January 1, 2009 and payable on February 1, 2009, the company said in a statement. The move was consequent with a reduction in cost of funds, the company said.

For new customers, LIC Housing Finance, had already reduced interest rates from December 17. For loans upto Rs 20 lakh and upto five years, the lending rates stand at 9.25 per cent.

For loans upto Rs 20 lakh and above five years, LIC Housing Finance has reduced lending rates to 9.75 per cent.