In what could trigger another round of rate cut war, National Housing Bank on Wednesday slashed lending rates by 0.40-0.65 per cent just two weeks before the Reserve Bank of India announces its busy season credit policy.

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To boost the rural housing sector, NHB would offer additional 0.25 per cent lower rates to various institutions for loans upto Rs 10 lakh (Rs 1 million).

The refinance rate, the rate at which NHB lends to housing finance companies, has been lowered by 0.40 per cent to 6.70 per cent for 3-year loans upto Rs 10 lakh.

The rate has been slashed to 6.9 per cent for 3-7 year loans and to 7.10 per cent for 7-15 year loans, a NHB release said in New Delhi.

For loans above Rs 10 lakh to Rs 1 crore (Rs 10 million), the lending rate has been cut to 6.90 per cent for 3-year loans, 7.10 per cent for 3-7 year loans and to 7.30 per cent for 7-15 year loans.

The floating rate loans have been slashed to 6.50 per cent for 7-year loans upto Rs 10 lakh, while it is 6.70 per cent for 7-15 year loans.

For loans above Rs 10 lakh, the floating rate has been pegged at 6.70 per cent for 7-year loans and 6.90 per cent for 7-15 year loans.