Mumbai, May 17 (IANS): Following the cut in home loan rates, HDFC Bank's Vice Chairman and CEO Keki Mistry on Tuesday said the reduction in lending rates for home loan is due to diminishing cost of funds and the significant drop in interest rate is not expected.

"The interest rates have come down quite a lot from last year. Every passing month, the benefit of lower cost of funds is being passed on to consumers. The rates are coming down because of cost of funds has come down.

"The big significant drop in interest rates that we saw in January is not going to repeat. The rates can come down up to a territory and it can come down by 5-10 basis points, not much more on that," he told BTVi in an interview.

Private lender HDFC reduced its rates for women borrowers to 8.35 per cent and others to 8.40 per cent for home loans of up to Rs 30 lakh.

On May 8, the country's largest home loan provider State Bank of India (SBI) announced a reduction in the home loan rates by 25 bps from 8.60 per cent to 8.35 per cent per annum.

Private sector lender ICICI Bank also reduced its interest rates by up to 30 basis points (bps) for home loans of up to Rs 30 lakh.

He agreed that the industry is at the bottom of the home loans rate cut cycle for near term, at least.

Mistry pointed out it is probably the best time to buy homes because the interest rates are at the lowest in the last 7-8 years and property prices have not gone up.