Latest Property News on 'Home Loans'

HDFC Increases its Retail Prime Lending Rate (RPLR)

After a gap of two years, mortgage leader HDFC has increased its retail prime lending rate (RPLR) by 50 basis points to 14.25 per cent.
Significantly, the lender has not said anything on the continuation of its “teaser rates loans”, launched late last year and which was supposed to end yesterday.

“This (the hike) is in line with the current rates of interest in the economy, which have hardened in the last few months due to rising inflation and tightening of liquidity in the domestic market,” HDFC said in a statement, adding that the new rates will be effective from tomorrow.
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Realtors Express Satisfaction on Tax Exemption in Housing Loan Segment

Realty firms and consultants have expressed satisfaction on the proposal to retain income tax exemption on interest up to Rs 1.5 lakh a year on housing loan, but said the government needs to enhance the limit. “It is a very good thing that the government has retained the exemption. It will have a feel-good sentiment in the market,” said Anuj Puri, country head, Jones Lang LaSalle Meghraj (JLLM).

He said the move will not dishearten the low and mid-income group from going ahead with their buying decisions. The first draft of Direct Tax Code (DTC) was silent on exemption on interest paid on housing loans. However, after adverse feedback from various quarter, the second draft proposed to retain this exemption, which is also incorporated in the bill.
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No Change in Home Loan Rates for Now

Retail bank customers need not worry about any rise in the equated monthly installments (EMIs) on their home loans with banks expected to absorb the rate hikes by Reserve Bank of India. The special home loan rates of banks will continue for now. OP Bhatt, chairman and managing director of State Bank of India, said their special home loan rate of 8 per cent is open till September 30. “We will take a call at that time,” Bhatt said.

Private banks, which had a special home loans scheme of 8.25 per cent, may continue for a while as CEOs of all large banks agreed that raising lending rates is not immediate on their agenda. If banks keep their rates static, housing finance companies like HDFC and LIC Home Finance will also follow suit to keep the rates at present levels. Read More »

Residential Real Estate Prices Hitting Peak Level- HDFC

country are hitting the peak levels observed pre-slowdown. “There is an improved economic sentiment and developers have started charging premiums as land prices have also suddenly started going up…prices are getting to the peak levels,” HDFC’s Chairman, Deepak Parekh, said while addressing shareholders at the company’s annual general meeting here.

Parekh said between September 2008–when the slowdown hit the markets–and October 2009, residential real estate prices dropped by over 25 per cent but have started going up afterwards. He cited such trends observed in India’s most active markets of NOIDA in the NCR, western suburbs of Mumbai and a Bangalore suburb to illustrate, saying the prices have gone up across all of them. Read More »

Lending Norms can Change in Home Loan Segment

The National Housing Bank (NHB), the regulator for banking and finance companies, is working on a system similar to the base rate regime introduced for banks recently.

“We will keep a close watch on how the base rate system works out for banks over the next two quarters. By March, we will have enough reference points to take a view, based on which, we should be in a position to start moving towards a similar regime,” NHB Executive Director R V Verma said.

The base rate, substitute for the earlier benchmark prime lending rate (BPLR) for banks, was introduced from July 1. The country’s largest lender, State Bank of India, fixed its base rate at 7.5 per cent. The rate for most banks is in the range of 7.25 to 8 per cent. Read More »

Ten-fold Increase in SBI’s Loan Limit

State Bank of India (SBI) will increase by ten-fold its loan limit to individuals planning to buy land to build a house as the country’s largest lender makes a greater push into the housing segment. The bank has finalised a proposal under which it will lend Rs 10 crore for buying land for housing against the earlier cap of Rs 1 crore, said a senior SBI official. The bank has eased a rider pertaining to the construction period if the project is undertaken by government agencies. Currently, a project must be constructed within two years.

“Acustomer will also be eligible to avail another housing loan for other housing-related construction on that plot, enjoying the benefit of running both the loans concurrently,” said a senior SBI official. SBI, however, hast set the margin money limit — the amount a customer has to pay upfront for availing a loan — at nearly 35% for loans above Rs 1 crore. For loans up to Rs 75 lakh, SBI has fixed the margin money requirement at 20%. SBI’s latest move to push ahead in the housing sector follows its troubles with excess liquidity and a tepid credit offtake. Read More »

State Bank of Patiala to Extent its 8 per cent Home Loan Scheme

State Bank of Patiala has extended its teaser rate scheme of 8 per cent on home loan till 30th June, 2010. Under this loan scheme, SBOP offered fixed rate of 8 per cent for the 1st year and 9 per cent for 2nd and 3rd year and thereafter prevailing rate linked with BPLR/ Base Rate. The maximum tenure is 25 years.

Govt Plans to Change Home loan Prepayment Rules

The government may seek changes in the prepayment rules to enable a home loan borrower to shift to cheaper lenders if his bank raises interest rates soon after disbursing the loan.

The government wants banks to provide a two-month window to their new borrowers to shift to some other bank without prepayment penalty if they have raised interest rates too quickly after disbursement. The finance ministry is likely to take up the matter with the central bank to seek these changes.

“If a bank hike interest rates within a month of the loan taken by a customer, the borrower should also be allowed to look for cheaper options without paying any charges,” said a senior finance ministry official adding that levying a prepayment charge in such cases was like a double penalty. Read More »

RBI directive to NBFCs on housing projects

Non-banking finance companies giving loans to developers/owners of housing/development projects should insist that the latter disclose name(s) of the entity to which the property is mortgaged in their pamphlets/ brochures inviting the public at large to purchase flats and properties, the RBI said in a notification.

Further, they should also indicate if required, that they would provide No Objection Certificate/ permission of the mortgagee entity for sale of flats/property. Read More »

National Housing Bank warns against Teaser Home Loan Rates

National Housing Bank, which regulates housing finance firms, has warned against risks to the sector from teaser rates under which loans are given at concessional rates for a limited period. The Finance Ministry, as also the banking sector regulator RBI, have already expressed their apprehensions over teaser rates, which a number of lenders, including SBI, HDFC and ICICI Bank, have been offering in a bid to expand market share.

“We have to be on top of the issue (teaser rate)… closely follow the issue to have better handling of the subject so that it should not start hurting the sector,” NHB executive director R V Verma said. Read More »