Latest Property News on 'Home Loans'

No Soaring Interest Rates on Home Loans, Expect Bankers

Bankers eliminate the requirement of any further hike in interest rates on home loans since rate of growth of credit seems to be undergoing corrections in these sectors.

The government is taking stringent steps to control soaring demand in real estate market and housings sectors, banks are trying to follow the existing directives to contain growth of credit in the housing sector, says K Raghuraman, executive director of Punjab National Bank. Read More »

RBI Asks Banks to Go Slow on Home Loans

The commercial banks will now be going at a slow pace on the housing loan portfolio. The move is the resultant of a recent warning from Reserve Bank of India (RBI). Housing loan portfolio of most public sectors was growing by about 35% to 40% each year, as per the data compiled by industry connoisseurs.

The RBI has recently asked the banks to cut their exposure to real estate companies, personal consumption loans, credit cards spends, and concentrate more on productive sectors such as infrastructure, small and medium enterprises (SMEs). Read More »

Canara Bank Raises Floating Rate on Home Loans

Canara bank has increased its floating interest rates on home loans by 175-200 basis points as it struggles with shooting defaults. The banks will also charge second home buyers 25 basis points more, even if the borrower has not availed any loan for the first house.

The bank will charge 25 basis points higher interest on a home loan above Rs 20 lakh than the home loans up to Rs 20 lakh. The bank is charging 10.75-11.25 per cent rate of interest on home loans up to Rs 20 lakh. All the revised rates have already been made effective from June 1, 2007. Read More »

Combing Through Different Home Loan Options

With fluctuating interest rates on home loans, people interested in buying home are perplexed to go which way: Floating home loans or fixed home loans rates. The Reserve bank of India (RBI) has been using different tools such as the repo rate; the cash reserve ratio and the risk weightage on home loans. After a thorough analysis, the apex bank comes to the conclusion that banks’ exposure to the real estate sector is too high.

The situation has become more complicated for first time buyers who are hardly acquainted with the basics of home loans and the impact of rate hikes on the borrower.  If it is assumed that all the borrower are income tax payers and pay at the rate of 30 per cent and getting the entire tax exemption on interest rate of Rs 1,50,000 a year. Read More »

Home Loan Scenario in India

There have been major up and downs in home loan market in India, but the Centre has taken some steps to offer relief to borrowers. With increasing interest rates on home loans, the common man carries the burden of fat EMIs.

Since March, the interest rates fluctuations have been puzzling public and even to some experts. The floating interest rate is now around 11.25-12% while the fixed rate is hovering around 13.25-14%. The beginning of 2007 saw floating and fixed rates at 9.75% and 11%, respectively. If the loan is taken for the short term, the increase in rates – by 150 basis points – changes to a 9% rise in the EMI bill in the last three months. Read More »

Home Loan Rate to Stay Unchanged

The Reserve Bank of India may take sometime to relax the current stringent fiscal curbs it has imposed on banks. For that reason, home loan borrowers will require to wait awhile.

The demand for home loans is sliding with soaring interest rates and the ongoing correction in property prices being major factors responsible for such a scenario.  The home loan industry had grown by leaps and bounds in the previous fiscal year, but the growth is likely to slow down by 18% in the current fiscal. The correction phase in the real estate market is likely to continue till September, say industry watchers.

The market should see reversal of the current trend in this festive season, expects Rajiv Sabharwal, Senior General Manager at ICICI Bank and in chare of its home loan division. Read More »

No Lower Interest Rate for Home Loans below Rs 20 lakh

Contrary to what the Reserve Bank of India (RBI) asked banks to reduce interest rates on home loans below Rs 20 lakh in the housing sector, they are planning to bring a further hike in interest rates on the same.

In the April credit policy, the apex bank has reduced risk weightage on home loans below Rs 20 lakh. The move was taken considering passing the benefits to customers. On every loan, a bank advances; it has to set aside capital in its books. The required capital is evaluated by the risk weightage or the regulator’s perception of a risky undertaking of the loan. Read More »

Home Loans - No More Doing the Borrowers’ Way

In an effort to secure books amid soaring interest rates and increasing frauds, banks have decided to come up with new guidelines in home loan agreements. However, these new clauses are believed to cripple already suffering borrowers who are struggling with their budget to pay higher Equated Monthly Installments (EMIs).

Some banks are no more lending fixed rate loans beyond a few years whereas a few have set an early reset clause. There are a few banks which are insisting on a lock-in-period during which a switch from fixed to floating rates is not possible. Read More »

Home Loans – Should I Opt For ‘Fixed’ or ‘Floating’?

The year 2006 brought a time for celebrations for all the sectors including equity, debt, commodities, and Indian real estate market. Considering the performance of ULIP, it is associated with the capital market. ULIP’s and all life insurance products are looked upon as a very long term saving product and risk cover. It is highly beneficial for the security of long term savings like retirement days and child’s education.

The year did well for home loan investors as well. The market for residential spaces has grown at 25%. With interest rates on home loan hitting the sky, borrowers are availing loans for higher tenures. Increasing real estate prices is one of the factors influencing the market growth of home loans. Read More »

How Beneficial Will Reduced Risk Weightage Be For Borrowers?

The RBI will not bring any change in the benchmark interest rates and Cash Reserve Ration (CRR) rates but bring a drop in risk weight on home loans below Rs. 20 lakh.

There is a significant reduction in risk weightage on home loans which has slipped from 75 per cent to 50 per cent. This renders that for every Rs 100 lent at home loans, the bank will now need to have its own capital of Rs 4.50 as against Rs. 6.75 earlier. This is allowing for a 9% capital to risk weightage ratio that banks will be maintaining from now onwards.

Banks have been asked to extend the benefits of reduced risk weightage to consumers or they could translate it into lower interest rate for loan borrowers in the Rs 20 lakh category. The conversion would be based on the lending institution’s portfolio. Read More »