Housing finance major Housing Development Finance Corporation has cut its home loan rates for fixed-rate loans by 25 basis points across maturities.

This brings the fixed rate up to five-year loan to 9 per cent, six to 10 years 9.25 per cent and above ten and up to 20 years 9.75 per cent.

This also brings HDFC's fixed rate loan and floating rate loans on a par. In other words, there is no rate differential between the two products.

Industry sources, however, said there is nothing sacrosanct about the floating rate loans as they can be beaten down.

"All home loan players are cutting down their floating rates without formally making any changes in the rate charts. However, this is not the case with fixed rates," said an industry source.

State Bank of India has recently cut its home loan rates up to five years by 75 basis points to 8 per cent. This is the lowest five year loan rate offered by any public sector bank.

HSBC is even offering home loans at 7.99 per cent, possibly the lowest in the industry. This is a fixed rate loan but the rate will remain static only for three years after which the bank may realign it, depending on the prevailing interest rate scenario.

The bank's floating rate customers (between 8.25 per cent and 8.75 per cent)  are given a choice of shifting from floating to fix and vice versa once a year without being charged any penalty.

Industry sources said banks and housing finance companies have dumped the official loan rate charts and are busy negotiating rates with new customers.

Any "high value" customer who wants home loan of Rs 5 lakh (Rs 500,000) and above can now "negotiate" the loan rate and bring it down to any level. The undercutting is particularly fierce for taking over old loans.