Mumbai, March 16: LIC Housing Finance Ltd today reduced interest rates for existing home loan borrowers by 75 basis points.

Interest rates on home loans will now be between 10-10.50 per cent against 10.75-11.25 per cent earlier.

The housing finance company said the cut was a result of a reduction in cost of funds.

The company said the revised rates, the lowest in almost two years, would be effective from April 1.

This rate reduction is the second such move by the company in the past three months.

It had earlier reduced the interest rates by 75 basis points for its existing home loan borrowers, effective from January 1 this year.

LIC Housing Finance, which competes against the likes of the State Bank of India, HDFC and ICICI Bank, has also announced a special rate of interest for customers opting for floating rate loans.

The new floating rate has been fixed at 8.75 per cent for loans up to Rs 30 lakh. For loans above Rs 30 lakh and up to Rs 75 lakh, interest rates will be 9.50 to 9.75 per cent and for loans above Rs 75 lakh, interest will be charged at the rate of 10.50-10.75 per cent.

For the third quarter ended December 2008, the company sanctioned loans worth Rs 2,625 crore and disbursed Rs 1,944 crore, a growth of 15 per cent and 18 per cent, respectively.

The total income of the company, including other income, for the quarter was Rs 767 crore against Rs 550 crore during the same period last year.