Developers may reduce home loan rates

October 16, 2008	(Be the first to rate this story!)  Loading ...
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Its good news for the buyers as real estate developers are thinking of reducing the home loan rates even though banks are planning to wait for sometime before reducing their lending rates immediately after the RBI’s announcement of 150 basis points cut in the cash reserve ratio. However the real estate developers are not following that trend and planning to ease the home loan rates. The home loan rate that rose from an average of 7% to a range of 12 to13% hampered the demand for real estate property. Over the last one and half year, demand in this sector has decreased by almost 25 to 30%. Now the developers are stepping towards improving the demand by reducing their lending rates.

Indian cities enjoyed a real estate boom for nearly four years, ending 2007. After being stagnant for the first part of the year, property prices slid about 15% during the last two months in the fast growing cities like New Delhi, Mumbai, Bangalore and Pune. Mr Pradip Kumar Chopra, Chairman, PS Group feels that the CRR cut would have an impact in the home loan rates. “The home loan rate in India is among the highest in the world and we expect it to be reduced by at least 100 basis points after the cut in CRR,” he said. “The recent move by RBI is expected to enhance liquidity to the primary and secondary real estate funding, while arresting further de-growth in real estate investments in the country,” said Mr Abhijit Das, Regional Executive Director, JLL Meghraj.

An official from United Bank of India said, “We have temporarily suspended loan disbursements towards real estate projects.” As on March 31st 2008, the bank’s total loan outstanding with different real estate projects stood at Rs 2,500 crore. The banker however felt that the cut in CRR might increase liquidity that would be used to enhance the extension of loans to this sector. Mr Pradeep Sureka, President, Confederation of Real Estate Developers Association of India and Managing Director, Sureka Group, said, “Banks are funding real estate sector with caution only after a project is sanctioned and construction has started. Time will say whether the cut in CRR will have any positive impact on the sector.” The Indian real estate market that has faced the worst slowdown in the recent past is expected to drive away the gloom during the festive Diwali season. Rajeev Talwar, group executive director of DLF, the country’s largest developer said, “We will take sometime to adapt to the changing global scene but the property market will thrive at a realistic rate, as speculative growth will go down.”

News Published Under:   Home Loans |

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