Housing finance major, HDFC is offering the cheapest floating interest rate of 7.25 per cent on home loans in excess of Rs 10 lakh and at 7.5 per cent for loans below Rs 10 lakh. The going rates range between 7.5 per cent and 7.75 per cent, depending on the size of the loans.

At a time when the industry has hiked floating rate home loans, HDFC has dropped its rates for this month. The idea behind the special offer is to expedite the decision-making process of customers who have already got their loans sanctioned, said industry sources.

All the players had hiked their rates on floating rate home loans by 25-50 basis points in November last year.

HDFC's special offer initially targeted existing customers who have been sanctioned loans. Now, it has been extended to new customers who opt for disbursement of their loans by January 24.

ICICI Bank, the most aggressive player in the mortgage market, has not made any special offer at this juncture. Accepting the vast difference between actual sanctions and disbursements, ICICI Bank officials said: "We usually tend to keep in touch with our customers and help them identify properties and prepare the paper work when required."

The average differential between sanctions and disbursements for the industry varies between 75-85 per cent. In the case of ICICI Bank, it is about 80-85 per cent.

HDFC has taken a proactive step to bring down the differential and in the process started offering new customers the benefit of lower interest rates. It has written and SMS-ed to its customers offering a 25 basis point discount on the current rack rates on floating home loans.

The housing finance industry today faces an acute problem of customers not availing of the sanctioned loans. Files are kept open for six to eight months as customers take time in selecting properties.

There have been instances of customers dropping the idea of buying a home even after paying the processing charges of the home loan.