Latest Property News on 'Home Loans'

Norms for Housing Loans by Coop Banks Relaxed: RBI

Making it easier for urban cooperative banks to extend housing loans, Reserve Bank has relaxed the risk provisioning norm for purchase of residential properties up to Rs 30 lakh.

The central bank issued notification yesterday in pursuance of the annual credit policy announcement made by the Reserve Bank Governor Y V Reddy on April 29. Read More »

Home Loans may become Costlier as RBI raises Repo Rate

Consumer, home loan, auto and other loans could become costlier with the Reserve Bank today hiking its short-term lending rate to banks by 0.25 per cent to 8 per cent in the face of surging inflation.

Announcing the increase from 7.75 per cent, the central bank said the decision was taken to contain inflationary expectations as the rate of rise in prices touched a 45-month high of 8.24 per cent. Read More »

Real estate growth impacted due to high interest rates: ICICI

Leading home loan lender ICICI Bank on Thursday said that growth in the real estate sector has been impacted due to high interest rates and prices but maintained that there was no asset bubble in the sector.

“Clearly there is a slowdown in the number of deals …interest rates have gone up from eight per cent in the past to now 12 per cent and prices too have gone up but an asset bubble is not there,” ICICI Bank Joint Managing Director Chanda Kochhar said. Read More »

Lack of Clarity may Hit Realty Funds’ take-off

A week after Sebi announced guidelines for real estate mutual funds, officials at fund houses and real estate developers are awaiting clarity on certain issues before they go ahead with scheme launches. Industry experts point out that taxation, periodic calculation of net asset value (NAV), and absence of any benchmark indices are some of the contentious issues turning out to be stumbling blocks in the design of such products.

Pranay Vakil, chairman, KnightFrank India, says that a quarterly valuation exercise would not be very easy to implement. “Let us assume that an REMF consists of 10 real estate assets and each asset has been acquired at different periods of a year. So, how one can calculate a composite NAV of fund, taking into consideration all these properties purchased?” asks Mr Vakil. Read More »

Home Loan rates to soften for smaller loans

Banks now have an incentive to lower interest rates on home loans below Rs 30 lakh as the Reserve Bank of India has reduced risk weight on such loans. RBI governor YV Reddy said, “Reduction in risk weight age is an enabling provision and we expect banks to pass on the benefits to the customers.”

But at the same time, banks are not planning to raise interest rates on bigger home loans despite a hike in the cash reserve ratio. “Considering the slowdown in the economy and that interest rates have already peaked, banks may not consider raising lending rates immediately,” said Punjab National Bank’s CMD, KC Chakrabarty. Home loan rates vary from 9.5% to 12% on the floating rate loans. Risk weight on home loans up to Rs 30 lakh will now be 50 basis points. Earlier risk weight on home loans up to Rs 20 lakh was 50 basis points and above Rs 20 lakh was 75 basis points. Read More »

Home Loan Rates may go up Soon

Home loan rates have begun to harden. IDBI Bank has withdrawn the 0.5 per cent cut in rates of home loans and other debt it had announced on Wednesday. Many other banks, say industry experts, are likely to follow suit.

Inflation is at a 12-month high of 6.7 per cent, making it costly for banks to raise funds.This burden will have to be passed on to borrowers through higher interest charged on their loans. Read More »

RBI’s Decision may hit Real Estate Companies

The Reserve Bank of India’s (RBI) decision not to cut interest rates has spooked real estate companies facing the brunt of a housing industry slowdown caused by the high cost of mortgage financing. RBI, on Tuesday, decided to keep interest rates unchanged in its third-quarter monetary policy review. Real estate companies were expecting a cut, especially in the backdrop of slowing home sales in major cities in the past few months.

Buyer resistance and a series of interest rates hikes last year put the brakes on home sales last year. Middle-class households put off purchases after seeing prices break all records in most major metros. ET’s report, on Tuesday, cited RBI data to show that home loan sales fell 39% in April-November 2007 while loans to developers eased by a fourth to Rs 12,563 crore. Read More »

Rising rates hit home loans growth

Rising interest rates have hit banks’ consumer finance business, particularly the housing loan segment. The dip in growth is led by a slowdown in housing loan portfolios of banks. Interest rates on home loans have increased to over 10 per cent, affecting demand. The rising real estate prices have also had an impact on the loan growth.

Credit flow to the real estate sector has also seen some drop. Despite the dip in credit growth to the sector, the Reserve Bank of India (RBI) views the 33 per cent growth to be high. Read More »

Housing Sector Affected by Rising Home Loan Rates

The housing sector has been severely affected by rising home loan rates. The sector has witnessed a massive fall of 26.6 per cent in 2006-07 from 29.1 per cent in 2005-06 and is expected to slow down further to touch between 17 and 20 per cent in the current fiscal.

In a study named ‘Impact of rising home loan rates’, by ASSOCHAM revealed the fact. The study also points out that the real estate market has already seen a drop of 60 per cent in sales. Its impact could further worsen if reversal in rising interest rates for housing is not addressed urgently. Read More »

India’s Home Loan GDP Ratio Stagnates at Just 5%!!!

Despite Indian real estate undergoing a paradigm shift, India’s home loan GDP ratio stuck at just 5% as against 50% in the US and UK.

90% of home loan borrowers in India are first time buyers. Interest rates on home loan have sharply risen from 7% in 2003 to 12% in 2007, with its impact largely following across the board including genuine home buyers, industry watchers, builders, and bankers.

A borrower of Rs 10 lakh with loan tenure of 20 years would have to shell out an extra of Rs 3250 every month on his EMI and annual additional burden would be as high as Rs 39,000 and loans up to Rs 20 lakh form 80% of the total housing loan portfolio. Read More »