Expensive Real Estate Market Makes Home Loans Dearer

April 20, 2007	(Be the first to rate this story!)  Loading ...
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Sky hitting property prices have made it difficult for most middle class families to think about availing home loans. The trend can easily be seen in the metros including Delhi, Mumbai, and Bangalore, where a basic two bedroom apartment is no less than for Rs 25 lakh.

The situation may also lead the consumers to take a route to private banks and financial institutions, which are in any case, see it difficult to retain their share of the safe housing loan business in the face of such turns.

Although, there is no particular definition for housing loans availed by individuals, but the commercial real estate – exceeding Rs 20 lakh – means that it would impinge on dreams of middle class people to have a self-owned home into reality.

Most bankers have come up with the recommendations to change the definition of commercial real estate so that only loans above Rs 30 lakh are put in this category.

A bank Chairman is learnt to have expressed concerns over the government’s decision to move the personal loans at snail’s pace. The reason behind is that the banks cannot turn not turn down the proposal if the borrower offers collaterals such as jewels or other savings products.

However, the FM is completely dedicated towards ensuring the sufficient credit flow to the ‘productive sectors’ and the fear of economic slowdown due to lower loan availability to business houses persuaded him to rethink over his decision.

Bankers are also asked to keep a tight scrutiny over flow of funds into the real esate sector which is also a significant instrument in the government’s strategy to beat inflation.

Chidambaram seems to be equally concerned about saving the interests of common man. This is what made me think over reducing the flow of prohibitive housing loans. The borrowers with the home loan of Rs 8-10 lakh must be protected, suggests the financial sector secretary Vinod Rai.

News Published Under:   Home Loans |

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