Industrial Development Bank of India (IDBI) has cut floating interest rate on new home loans by 50 basis points to 10.5 per cent. It has also floated a scheme called “buy now, pay later” to provide assistance borrowers purchasing under construction properties.

“The decision to cut rate is driven by competition and the new concessional rate of 10.5 per cent will be applicable to loans disbursed till December 31, 2007,” IDBI chief financial officer R K Bansal said.

Last month, the public sector bank had cut fixed home loan rate by 100 basis points. However, offtake under this category is very small as customers want the flexibility of downward revision in interest rates.

Major players in home loan players State Bank of India, ICICI Bank and HDFC have already cut home loans rate to boost the sagging credit demand. The spiralling real estate prices and elevated lending rates lead to a rise in equated monthly instalments.