Real estate prices may fall this year and the current interest rate will remain stable for the balance of the year, according to Deepak Parekh, chairman, HDFC.

According to the HDFC chairman, real estate prices are softening in Whitefield (Bangalore), in Gurgoan and in parts of the country where a lot of construction in happening. HDFC had recently announced reduction in interest rates on variable home loans by 25 basis points till July 15, 2007 for new borrowers. The country's largest housing finance provider said the rate cut was a part of a monsoon promotional offer.

A customer applying for home loan up to Rs 50 lakh between June 18 and July 15 will be offered a variable interest rate of 11% per annum instead of 11.25%. In addition, the reduced applicable fees during the promotion will be 0.25% instead of 0.50% of the loan applied for, subject to a maximum of Rs 5,000. However, the customer has to avail of disbursement before July 31.