SBI earlier this week slashed in its external benchmark-based rate by 25 basis points to 7.80 per cent from 8.05 per cent.
"HDFC reduces its Retail Prime Lending Rate (RPLR) on housing loans, on which its adjustable rate home loans (ARHL) are benchmarked by 5 basis points with effect from January 6, 2020," the mortgage lender said in a statement.
New rates will now range between 8.20 per cent and 9 per cent, and the change will benefit all existing customers, it said.
The rate cut by lenders come despite the RBI keeping its benchmark repo rate unchanged at 5.15 per cent in December monetary policy review.
During the interaction with media after the announcement of monetary policy on December 5, RBI Governor Shaktikanta Das had said that although it is not in a hurry to keep reducing interest rates, the central bank would work to ensure that transmission turns more effective since much needs to be passed on.
While the RBI had cut repo rates by 135 bps in five policy reviews in 2019, the one-year median MCLR has declined by only 49 basis points. The weighted average lending rate (WALR) on fresh rupee loans sanctioned by banks declined by only 44 basis points. DP BAL