Mumbai: Housing finance companies (HFCs) have started passing on the advantage of lower refinance received from the National Housing Bank (NHB) to buyers of affordable homes. The reduction in interest rate, which is up to one percentage point, will reduce the interest burden for this category of borrowers and help alleviate stress.

“We are writing to the eligible borrowers, those with income below Rs 6 lakh and have purchased homes in the affordable category, and informing them that because of the refinance provided by NHB, their interest rates have come down,” said LIC Housing Finance MD & CEO Siddhartha Mohanty.

The amount of funds disbursed to HFCs has been computed based on each institution’s lending to this category. “There is a misconception that interest rate reduction has not been passed on to borrowers. This is not correct. We are passing on the lower rates to existing borrowers who are eligible,” Mohanty added. As part of its Covid-19 relief liquidity package, last month the Reserve Bank of India had announced a Rs 10,000-crore funding to NHB to provide refinance to HFCs. Last week, the ministry of housing also communicated to SBI, Hudco and NHB its decision to extend the credit-linked subsidy scheme for the middle-income group by one year from April 2020 to March 31, 2021.