The country's top housing finance provider HDFC [Get Quote] on Friday announced a lower interest rate of 9.75 per cent for new loans up to Rs 30 lakhs (Rs 3 million) -- bringing the rates to lowest level in about three years.

Under the limited period offer applicable to new floating rate customers, the lender would charge 9.75 per cent for loans up to Rs 30 lakhs and 10.75 per cent for bigger loans.

Prior to the special period offer announced today, HDFC was charging 10.25 per cent for loans up to Rs 20 lakhs (Rs 2 million) and 11.25 per cent for bigger loans.

"The new rates are applicable for a limited period and follows a reduction in our deposit rates by 0.50-0.75 per cent effective on Thursday," HDFC joint MD Renu Sud Karnad told PTI over phone.

"As the cost of borrowing has come down for HDFC, we decided to pass on the benefit to our borrowers also," she said, while adding that the lower rates should encourage more home buyers to come to the market and then the property developers to lower their prices.

"We have already seen builders in select areas slashing their prices by 10-20 per cent, which coupled with lower interest rates should encourage more middle-income buyers to come to the market," Karnad added.

Asked if further correction in property prices could be anticipate, Karnad said, "I hope so...developers who have not already cut their prices should follow the suit. . . those who have already cut their prices could also announce further reductions."