HDFC had introduced floating rate loans last year. Traditionally, only commercial banks have been offering variable housing loans, linked to the prime lending rates (PLRs).

Till now ICICI has only fixed rate loan products with interest rates depending on the tenure of the loan. The loans between one and five years bears an interest of 11.25 per cent, six and 20 years 12.75 per cent and 21 and 30 years 12.85 per cent. HDFC has recently cut the rate on its fixed rate home loans to 13 per cent, down from 13.25 per cent. Its variable loan rates is pegged at 12.50 per cent. ICICI has kept an ambitious target of Rs 1,500 crore for their housing finance business in 2000-2001. It sanctioned Rs 400 crore and disbursed Rs 130 crore in the financial year 1999-2000 - the first complete year of operations since the subsidiary ICICI Home Finance came into being.

ICICI plans to expand business to cover 22 towns in the current fiscal. The business targets will are to be achieved through a hub and spoke arrangement where a relatively big town will function as a hub with neighbouring towns functioning as spokes driving the business. The hub-spoke arrangement is already in place in towns like Nasik and Aurangabad. Through this arrangement, ICICI hopes to increase lendings by about 25-26 fresh cases every month. ICICI continues to offer the cheapest home loan products even after the fresh round of reductions from LIC Housing Finance Ltd. For loan slabs up to Rs 25,000 the rate of interest is 12 per cent and for loans up to Rs 50 lakh the revised rate is 13 per cent for tenures up to 15 years.

For loans up to 20 years, the rate is pegged at 14 per cent. The interest rates are applicable for loans with collateral security of LIC policy. Rate of interest for loans without LIC policy under "Griha Lakshmi" scheme remains unchanged at 13.5 per cent per annum. HDFC plans to increase its business by another 25 per cent. During the last financial year ended march 31, HDFC approved loans worth Rs 24,215 crore and disbursed Rs 20,150 crore. The individual loan portfolio increased by around 50 per cent. LIC plans to sanction over 60,000 individual loans for Rs 1,768.10 crore and disburse over 57,000 loans for Rs 1635 crore. Besides these individual loans, the company plans to sanction Rs 55 crore to corporate bodies, public housing agencies & developers. out of which disbursements will be of the order of Rs Rs 50 crore.