Latest Property News on 'Home Loans'

Reduce interest rates to boost housing demand: Realtors

NEW DELHI: Real estate developers today said that RBI’s decision to cut cash reserve ratio (CRR) will help improve the liquidity position of various sectors, including realty, but felt that interest rates should be brought down to boost housing demand.

“The CRR cut will bring in liquidity. It will help the real estate market which is cash starved. However, it is important to see the interest rate shall have to come down to facilitate the home seekers to buy homes,” Confederation of Real Estate Developers’ Association of India (CREDAI) President Lalit Kumar Jain said in a statement.

In its third quarterly review of the monetary policy, RBI today injected Rs 32,000 crore into the system by lowering the CRR by 50 basis point but kept the short-term lending rate unchanged in view of persisting inflationary concerns.

Echoing the view, Unitech Managing Director Ajay Chandra said: “A reduction in the CRR is a positive move from the RBI as it will increase the credit-supply to different sectors of the economy.”

Chandra noted that an increase in the credit supply would also benefit the realty sector.

CREDAI Chairman Pradeep Jain said the apex bank has given a signal that interest rates would come down.

“For real estate sector in particular, this will serve as a signal that interest rates will now ease. Buyers may opt for floating rate loans at this juncture since the signal is clear. Also the rising input cost will not leave any space for reduction of price,” Jain, who is also Chairman of Parsvnath Developers, said.

Credai Chairman said that RBI has attempted to do a delicate balancing act between the need for growth and urgency of containing price line.

“In the end it (RBI) has acted with caution by keeping all rates unchanged and just by reducing CRR by 50 basis points. The tokenism has seen release of Rs 32,000 crore for the banking sector to lend. After the negative impact created by thirteen continuous rate hikes, this will prove insufficient to boost the growth,” he added.

CHD Developers Managing Director Gaurav Mittal welcomed the policy saying that it would help in improving sentiments.

Source: http://economictimes.indiatimes.com/markets/real-estate/news-/reduce-interest-rates-to-boost-housing-demand-realtors/articleshow/11616222.cms

NRIs too can avail home loans

NRIs too can avail home loans for purchase of residential property. They can purchase a house and can even take loan for self-construction on a plot and also for renovation/improvement of an existing residential property in India.

Like resident Indians, NRIs can avail up to 80-85 per cent of the cost of residential property as a home loan. However, the down payment should be directly remitted from abroad through normal banking channels or from non-resident external (NRE) account and/or non-resident (ordinary) (NRO) account in India. EMI payments too should be remitted from any of these accounts.

In the case of NRIs, however, there is a stress on certain pre-requisites such as qualifications, current job profile, past experience, probability of continuing abroad for the loan tenure and probability of servicing the loan with an extended tenure in case of return to India. The Loan-To-Value (LTV) ratio for NRI customers varies from one bank to another, though the manner of calculation is the same in case of a regular home loan.

The income taken into account for calculating the home loan eligibility is the repatriable income plus any income in India. For NRIs working in countries that restrict repatriation such as African countries, only the repatriable portion of the income is considered for calculating loan eligibility.

Though the regular home loan tenures can be up to 25 years, loan tenure for NRIs is normally 10-15 years. Along with the standard documents required for a home loan, NRIs need some additional documents such as the appointment letter and contract, labour card (if employed in the Middle East), salary certificate, bank statements and income tax returns filed in the country of residence.

Loan eligibility can be enhanced by taking a joint loan with relatives. However, for certain reasons banks allow only a select list of relatives to be joint owners of the property.

It is important that NRI provides General Power of Attorney (POA) in favour of a trustworthy relative as per the draft of the Bank which should be duly attested by the Indian consulate in the country of residence. In case the loan borrower is in India, the POA can be locally notarised. Most banks require the POA to ease the process of dealing with the NRI borrower. The POA holder only gets the powers that you give and does not have the power of dealing with the property.

Like resident Indians there are certain tax benefits too for NRIs on interest payments which can be useful if they have any taxable income in India.

Source: http://www.financialexpress.com/news/nris-too-can-avail-home-loans/899480/

Take a home cover and sleep well

Cricket maestro Sachin Tendulkar made headlines last week when bought a home insurance cover of Rs 100 crore. He is not only aware about the risks on the cricket field, he seems to be well informed of the risks like fire, natural calamity, burglary and theft. Reports suggest Tendulkar took an insurance cover of R 25 crore for household items in his Bandra home. The question one may ask is: why would a person as rich as Tendulkar need to cover his home and belongings?
You would get the answer once you try and imagine a situation wherein you come back from the office to find someone has broken your lock and taken away jewellery, electronic equipment etc setting you back by several lakhs of rupee.

Similarly, things bought through years of savings would vanish in a matter of minutes due to fire or natural calamity. While you cannot do much to prevent such incidents, beyond basic security measures, a household insurance is something you must have in your kitty. Such policies are available at a premium that on an average cost Rs 5 per day.

It is a policy that is designed to cover various risks and contingencies that any home owner might face. However, the insurance company may be quick to reject the claim if the fine print has not been understood.

The value of home structure is assessed by multiplying the area by the rate of construction, as on the date of taking the policy. For example, if your home is 1,000 square feet and the construction rate per square feet is R 500, then the sum insured for your home’s building structure would be Rs five lakh. While the home loan providers may insist on insurance for the entire loan amount, you need to take into account cost of construction on the built-up/ carpet area and exclude the land cost which is not covered.

On the other hand, the belongings inside the house are assessed on their market value. This means that the claim would be paid on the value of purchasing a similar new item, minus depreciation for the usage.

There are several clauses which you must look at before choosing which policy suits you best.

What is covered

Home insurance normallycovers most of the natural and man-made calamities.

* Fire

* Lightening

* Explosion/ implosion

* Aircraft damage

* Impact damage

* Riot, strike, malicious and terrorism damage

* Storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation

* Subsidence and landslide including rockslide

* Bursting and/ or overflowing of water tanks, apparatus and pipes

* Missile testing operations

* Leakage from automatic sprinkler installation

* Bush fire

* Earthquake

The buildings and contents are covered for these perils. The sum insured is either on the re-instatement value or the market value. However, remember that depreciation would be applicable while calculating claim amount.

* Burglary and theft

Remember to check the policy wordings carefully as there is a technical difference between a theft, robbery and burglary.

According to HDFC Ergo general insurance, “burglary is said to take place when there is a forceful entry into the premises in order to rob while theft is said to take place when there is a robbery without any evidence of a forceful entry in the premise.”

The damage caused due to housebreaking and theft is normally covered.

* Optional cover for terrorism

Most general insurance companies provide a cover for acts of terrorism at an additional premium which you can opt for.

Common exclusions

While insurers may have different list of exclusions and the policy must be checked for exact wordings, normally any loss or damage suffered to the following is treated as an exception and are difficult to claim. The exclusions are the trickiest part and must be checked from the insurer should there be any confusion.

* Consumable articles

* Money/ securities/ stamps/ stamp collection

* Bullion and livestock

* Motor vehicles and pedal cycle

* Deeds/ bonds/ bills of exchange/ promissory notes/ shares

* Books/ manuscripts

* Loose precious stones, jewellery and valuables

Devil is in the detail

“Unless declared” is the term you must be most cautious about. An insurance company has no magic wand to find out, after a claim has been made, whether what you are claiming is correct or not except when some concrete proof is provided.

A lot of people do not make itemised declaration of their belongings and repent at the time of claim settlement. Make a list of each and every item and indicate the value against it. Do make sure to keep the bills and other proof of purchase as you may be asked to produce it at the time of claim settlement.

Jewellery is one of the most common and high value item which is normally ignored by the insured. “It is always better to prepare a list of such items to be insured. A valuation certificate of gold and other jewellery can come handy,” said Tapan Singhel, chief marketing officer, Bajaj Allianz General Insurance.

Another important point that needs to be checked is the sub-limits mentioned in the policy. The claim is subject to various caps on computers, refrigerators, gold jewellery, etc. This might come as a shock at the time of claim settlement so understand the policy before signing on the dotted line. As soon as you spot a loss, make sure to inform the insurer immediately. In case of a theft, file a first information report (FIR) in the nearest police station and inform the insurer.

Fire, earthquake or any other natural calamity do not give any advance warning before coming. Similarly, increasing cases of burglary, theft, and terrorism call for a careful assessment of risk and cover it through an insurance policy.

Source: http://www.financialexpress.com/news/take-a-home-cover-and-sleep-well/899978/0

NDMC budget: No increase in property tax of VVIP areas

The New Delhi Municipal Council’s (NDMC) budget unveiled today spared the VVIP areas of an increase in property tax, besides having no new major development initiatives.

The Rs 2,289.64 crore budget for the NDMC, which covers the Lutyens’ Delhi, proposes revamped power and water supply system, upgradation of markets, sprinkler irrigation system in Shanti Path, 35 new public toilets, CCTV survey of drainage for retrofitting and a flower show.

In her speech, NDMC chairperson Archna Arora said the budget for 2012-13 is aimed at asset creation which will be beneficial to NDMC both in terms of civic infrastructure and increasing receipts in the long term.

“The pace of infrastructure development was very high and creation of capital assets was large in numbers during the last three years. Now is the time to maintain these assets with increased levels of quality bench marks using latest technology as per international standards,” she said.

Outlining its revenue proposals, Arora said, the budget “propose no increase in property tax rates in the next year” and the civic body plans to collect Rs 259.98 crore as property tax in the next fiscal.

The civic body also plans to collect Rs 268.89 crore as licence fee, Rs 702.53 crore from power supply and Rs 113.60 crore from water supply.

Later, Arora told reporters that a detailed roadmap for revamp of electrical system has been prepared and that the NDMC has no plans to recommend hike in water or power tariffs.

The NDMC is also working towards ensuring uninterrupted water supply in the next 5-8 years, she said.

The budget also proposed retro-fitting and strengthening of drainage system after a comprehensive CCTV survey and de-silting in the next fiscal.

Arora said the redevelopment of Connaught Place will be completed in the next couple of years.

In its bid to provide better sanitation facilities, the NDMC will also build 35 new public toilets for which locations have been identified.

On the education front, the civic body will set up computer labs in all the 25 primary schools. A bio-metric based system for employees’ attendance is also proposed in the new fiscal.

The NDMC will also bring additional services under IT-enabled environment for citizen facilitation and convenience like approval for mutation, conversion and building plans, payments of utility bills and processing RTI among others.

For the upgradation and renovation plans of markets, the NDMC plans to take up work in eight more markets. It also proposes to provide space to install ATM facility in all its markets in the next fiscal.

To tackle fire incidents, the NDMC plans to convert the existing automatic fire alarm and detection system into addressable or semi-addressable microprocessor based fire alarm and detection system in all the high-rises as well as special buildings of the civic body.

In a move aimed at helping elderly, the NDMC also proposes to enhance old age pension from Rs 1,000 to Rs 1,500 for those who are above 70 years.

Source: Financial Express

RBI may reduce CRR in January policy review: HDFC

The Reserve Bank of India (RBI) may opt to reduce cash reserve ratio (CRR) in the monetary policy review on January 24 rather than cut the interest rates, Housing Development Finance Corp CEO Keki Mistry said today.

“RBI may cut the CRR than reducing the interest rate in the next policy review,” Mistry said addressing an event arranged by Wharton University of Pennsylvania titled ‘India Economic Forum’ here.

RBI has raised interest rates 13 times since March, 2010 by 375 basis points in its bid to control inflation which has been above 9% for a year. A rapid slowdown in food inflation in December has raised hopes of a reversal of the monetary tightening cycle.

Mistry, however, said that rising interest rates had minimal impact on the real estate market. “There is minimal impact of rising rates on real estate market, which is limited to metros. In Tier-II and other cities, the impact has been minimal,” he said.

Referring to outlook for the industry, Mistry said the current year would be better for the industry as interest rate environment is likely to be benign. Other experts from the real estate also echoed similar sentiment.

“As there is a huge demand-supply gap in the country as far as housing is concerned, current year should be better for the industry,” Chairman of Hiranandani Group, Niranjan Hiranandani said.

About the proposed formation of housing regulatory authority, he said that the bill would further delay the approval process causing delays in project completion.

“Real estate sector should have an enabling authority than a regulatory authority. Also, there should be a single window clearance system for speedy approvals,” Hiranandani said.

Source:http://www.moneycontrol.com/news/economy/rbi-may-reduce-crrjanuary-policy-review-hdfc_647803.html

Greater Noida: Great value for low costs

Located in Uttar Pradesh, barely 40 kilometres from New Delhi and 20 kilometres from Noida, the area of Greater Noida is slowly but surely on the path to becoming one of the largest industrial and education centres of the country. Real estate in this area is amplifying at a good pace in wake of its growing importance as a realty destination around Delhi. Like other areas of the NCR, Greater Noida too is home to a number of Indian and foreign companies, which is an advantage for the area. It is on its way to becoming a commercial hub. Real estate in this city has huge potential for development.

The proximity to Delhi and Noida and good connectivity with both cities has been a major catalyst for the growth of the city. The relatively pollution-free environment ranks it higher on the preference list of both developers and investors. The modern infrastructure in keeping with the demands of high quality living and improved living standards has made Greater Noida a destination of choice. In addition, a large number of construction projects offer quality housing and office space equipped with modern amenities, making real estate in the city all the more desirable.

To start with, the unaffordable property rates in Delhi had shifted the attention of developers to Noida, as it offered vast land at reasonable prices. Property in Noida flourished eventually to the extent that the property prices in the city have now skyrocketed. The builders are again in a fix and looking for other feasible options that may extend long term benefits and help cater to the phenomenal influx of population into the region. Thus, property in Greater Noida has come across as the next best option given its location advantage, good connectivity, green environs and the enormous potential fordevelopment.

Source:http://www.indianexpress.com/news/Greater-Noida–Great-value-for-low-costs/891367/

Nation Housing Bank to raise Rs 4,500 crore for housing

The National Housing Bank will raise about Rs 4,500 crore this fiscal to fund housing activities. It has fixed the refinancing disbursement target for 2011-12 at Rs 12,500 crore against Rs 11,723 crore in last fiscal. The funds will be utilised for refinancing home loans of housing finance companies and commercial banks.

Seminar on Affordable Housing

A 2-day affordable housing seminar will be held in Bangalore Le Meridian on December 14 and 15. Organised by UBM and Property World, the 2-day event will focus on the emerging and dynamic government and regulatory framework, innovative financing models and evolving mortgage financing, construction techniques and materials, power-packed networking opportunities and strategies through solution-focused workshop tailor-made to meet the critical business needs.

Industry speakers will analyse the dynamic case-studies followed by a site visit to a leading affordable housing construction site to gain practical, implementable solutions to the on-the-ground challenges developers face in the overall low-cost housing construction.

Marg to develop agri and rural infrastructure in Karnataka

Marg, a Chennai based developer, has signed a MoU with the Karnataka government to develop and operate various projects and services in agri and rural infrastructure and agri-industry domains in Karnataka with a total investment of Rs 4,000 crore over the next 5-7 years. The MoU was signed recently with the government of Karnataka on the occasion of Global Agribusiness and Food Processing Summit-2011 being held under Bounteous Karnataka.

Source: http://economictimes.indiatimes.com/features/et-realty/nhb-to-raise-rs-4500-crore-for-housing/articleshow/11102361.cms

RBI Hikes Repo Rate by 25 bps: Home Loan to Get Costlier

The RBI on Tuesday hiked repo rate by 25 basis points. It said likelihood of rate action in December mid-quarter review was “relatively low”. The central bank also deregulated savings bank deposit rate with immediate effect. The 13th hike since March 2010 will make home and auto loans costlier with banks likely to pass on the hike and put further pressure on economic growth. With food inflation entering double digit figures and headline inflation almost touching the mark, most analysts did feel the central bank would increase repurchase rate by 25 basis points to 8.50 per cent.

The RBI has hiked key policy rates 12 times since March 2010 to control inflationary pressure. However, that hasn’t helped in bringing down inflation much. The central bank hiked repo and reverse rates by 25 basis points each to 8.25 per cent and 7.25 per cent respectively last month. Food inflation rose sharply to cross double digit levels at 10.6 per cent for the week ended Oct 8 as against 9.32 per cent in the previous week. The headline inflation based on the wholesale price index was recorded at 9.72 per cent in September, according to the latest official data.

Inflation has remained almost near double digit since January 2010, despite an aggressive monetary tightening by the central bank and the claims of a series of fiscal measures by the government. However, the rate hike has shown its negative impact on the economic growth. Industrial production has slowed down considerably in the past few months. It was registered at a sluggish 4.1 per cent in August rising a bit from the 3.8 per cent seen in July — its lowest in almost two years. GDP growth slowed to 7.7 per cent in April-June period, the weakest in six quarters.

With rising cost of inputs and high interest rates, industrial output is likely to remain subdued in the coming months. According to a recent survey by the Confederation of Indian Industry, business confidence, especially among smaller firms, has declined in recent months. The CII’s quarterly business confidence index has declined by 2.5 per cent in the third quarter of 2011-12 as compared to the previous quarter.

IDBI Bank Cuts Interest Rate on Home Loan by 25-50 bps

IDBI Bank has cut interest rate on floating rate home loan scheme by 25 to 50 basis points for all existing customers. The bank has also introduced a fixed-cum-floating rate home loan product for new customers. Further, the bank has also decided to offer concession of 100 basis points (1 per cent change is equal to 100 basis points) in rate of interest for all segments of auto loans, the bank said in a statement. The bank said it reviewed its home loan rates in view of the market scenario, competition offerings and provide benefits to customers during the festival season.

All new borrowers would be given an option of either fully floating rate or a combination of fixed and floating rates. The bank has waived the processing fee for loan amounts upto Rs 25 lakh. Under the composite fixed-cum-floating home loan scheme, the bank will charge fixed interest rate for one to two years. Thereafter, the interest rate would be linked to the bank’s base rate, which is currently at 10.75 per cent. Depending on the loan amount, the interest rate on the composite fixed-cum-floating home loan scheme, which has fixed interest rate for one year, ranges from 10.75 per cent to 11.75 per cent. In the case of a loan on which interest rate is fixed for two years, the interest rate ranges from 11 to 12 per cent. The bank has decided to waive the processing fee for auto loans. All the offers are applicable to the new loans sanctioned between October 15 and December 31, 2011.

Home Loan Demand High Despite Rise in Interest Rate

Rising interest rates have had little impact on home loans. Borrowings have gone up 21% since March 2010 even as rates have gone up by around 300 basis points in the same period. Some of the pick up in loans is from tier-I and tier-II towns where property prices have remained relatively subdued. Some have also begun utilising their undrawn limits. According to the Reserve Bank of India’s latest data, aggregate home loans by commercial banks rose 21% to Rs 3,64,170 crore as of end August 2011 from Rs 3,00,929 crore in March 2010. In the current year, much of the growth in bank credit has been driven by home loans.

While total bank loans have risen 20.2% year-on-year (YoY) as of August 26, 2011 against 19.3% in the previous year, home loans rose 15.3% in the same period compared to 10.9% in the previous period.The RBI has raised its key policy rates by 300 basis points (one basis point is 0.01%) in the same period. Though home loan rates do not necessarily move at the same rate as the central bank signals, individual banks’ lending may vary by some margin. It is reckoned that on an average home loan rates have gone up by around 200 basis points. Most banks charge 13-13.5% interest for fixed-rate home loans. “The growth is largely coming from tier-II and tier-III centres,” said Keki Mistry, vice-chairman and managing director, HDFC.

Some lenders are also offering products to suit customer requirements that is partially contributing to the rise in loans. “We have also launched a fixed-rate product as there was a demand from customers who wanted to buy homes but were scared of the constant rise in interest rates,” he added. In recent years, most of the borrowing is on a floating-rate basis. Under this route, whenever borrowing rates change, the equated monthly instalments (EMI) also change, but the tenure changes accordingly. Customers who were worried that EMI keeps moving up and down, are now exploring fixed-rate products.

“We are witnessing high demand for fixed-rate products , which is why we launched our new fixedrate product,” said Jairam Sridharan, senior vice-president, head consumer lending and payments at Axis Bank, which launched a lifetime fixed home loans product last week. ICICI Bank and HDFC have also come out with limitedperiod, fixed rate products. Another possible explanation offered by banks is that some borrowers have started drawing on their unutilised limits, which has pushed up the loan figures. “The increase in home loan disbursements could be largely on account of the past approvals. Customers avail of disbursements with a lag, hence this is part of the old pipeline,” said the home loan head of a private bank. “We would have to wait a week to see if fresh demand comes, as the festive season is on the anvil. Many developers have launched a series of freebies and discounts to woe customers,” he added.