Home Buyers Can Now Get More Loan for Property up to Rs 30 Lakh

Mumbai: Banks can now provide home loans up to 90 per cent for properties that cost Rs 30 lakh or below, the Reserve Bank of India (RBI) said on Thursday.

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Earlier, the facility was available only in cases where the cost was up to Rs 20 lakh.

This will benefit those home seekers who plan to buy properties in the range of Rs 20-30 lakh.

The RBI's decision comes in the wake of all major banks reducing interest rate on home loans.

The Reserve Bank of India said in a circular that in case of 'individual housing loans' falling under the category of up to Rs 30 lakh, the LTV (loan to value) ratio is now up to 90 per cent.

For properties above Rs 30 lakh and up to Rs 75 lakh, the LTV is up to 80 per cent and for those above Rs 75 lakh, the ratio comes in at 75 per cent.

Source - NDTV India

Realtors hope for turnaround after home loan rates cut

Ahmedabad

The recent cut in home loan rates has revived hopes of a turnaround in the realty market. Buoyed by the RBI cut in repo rate, city-based realtors expect demand to increase slowly by Diwali. 

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"Unlike other cities in the country, the property prices in Ahmedabad have remained stable over the last three years. No major projects were launched during the period. Now, new projects are being launched. Many existing projects currently have no unsold inventory," said Deepak Patel, president, Gujarat Institute of Housing and Estate Developers (GIHED), which is organizing a three-day GIHED property show in Ahmedabad starting from October 9.

Shekhar Patel, managing director of Ganesh Housing, said the industry is expecting another round of rate cuts before the next budget. "Our economy has started showing positive signs. The rate cuts will certainly help the realty market," he said.

In cities like Bangalore, Chennai, Kolkata, Pune, Mumbai and Delhi, owning a house has become a daunting task for the salaried class. However, as compared to these cities, in Ahmedabad property prices are comparatively cheaper. According to the data released by real estate rating and research firm Liases Foras, at an average cost of Rs 28 lakh, flats in Ahmedabad are still cheaper.

According to Manan Choksi, director of RE/MAX Gujarat, "The average ticket size of each transaction for the first half of 2015 (January to June) was over Rs 3 crore. During this period value of transactions recorded in all the 19 sub-registrar offices of Ahmedabad was Rs 12,500 crore."

During the sluggish period, consumers were in wait and watch mode. "The prices of real estate in Ahmedabad have bottomed out and there is no room for further correction. This is the right time to buy properties as home loan rates have come down now and further rate cuts by RBI are likely," said Ashish Patel, vice-president, GIHED. The excitement among the realty players is evident from the fact that as many 70 reputed builders with 500 projects are participating in the property show and more are likely to join. 

Source - TOI 

SBI home loan customers to get only 50% benefit of cut in base lending rate

MUMBAI: The euphoria over State Bank of India's 40 basis point (0.4 percentage point) reduction in interest rates is likely to get watered down considerably for home buyers. India's largest bank has said that the interest rate on new home loans will be only 20 basis points lower -less than half of the 50 basis point reduction in benchmark rates by the Reserve Bank of India.

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This 40 basis point reduction in the bank's base rate will not fully apply to new home loan customers because the bank has revised the spread at which it will advance home loans for borrowers to 20 basis points above its benchmark base rate as against offering loans at base rate earlier.

Sources said that the bank had taken a decision to revise the spreads to protect its margins since the rate cut has been front-loaded without an equivalent reduction in the cost of funds.

SBI takes lead, lowers EMIs after RBI cuts repo rate

SBI's decision to cut interest rates on new home loans by only 20 basis points is a rare instance where old borrowers stand to gain more than new customers. A woman borrower who had taken a loan in the first week of October would get home loans at the base rate that is 9.7%.

Following the revision in the base rate, the borrower would see her loan rate coming down to 9.3% (base rate) in the next quarter. However, if she delayed taking the home loan to October 5, she will be able to avail the loan at only 9.5%. The lending rates applicable to women will also apply to joint loans where the first borrower is a woman. For all other borrowers, the interest rate would be 5 basis points higher (9.55%).

Sources said that the bank had taken a decision to revise the spreads to protect its margins since the rate cut has been front-loaded without an equivalent reduction in the cost of funds. SBIchairman Arundhati Bhattacharya had earlier suggested that the bank be allowed to come out with a teaser loan-type scheme to incentivize new borrowers. However, the RBI has not been very conducive to the proposal.

Rival lender ICICI Bank has announced a 35-basis-point reduction in base rate to 9.35%.The private bank has, however, not announced the home loan spreads. If the earlier spreads (base rate + 15 basis points) for women and (base rate +20 bps) for other borrowers continue, the home loans would be available at 9.5 and 9.55%. However, if the bank continues to offer loans at a markup to SBI, as has been its strategy in the past, the spreads may get revised. Both ICICI and HDFC were offering loans at 15 bps above SBI rates.

Besides revising spreads on its home loans, SBI has also made high-value Maxgain loans more expensive.

The Maxgain loan is a home loan structured as an overdraft. In this loan, the borrower is not charged any interest for any surplus that the borrower parks in a current account linked to the loan. For a Maxgain loan above Rs 1 crore, interest has been revised to 9.75% for women and 9.8% for men. In a commercial real estate maxgain loan, the interest has been revised to 9.95% for women and 10% for other borrowers.

Source - TOI

After RBI cuts rate, realtors want banks to cut home loan rates

MUMBAI: Real estate developers have welcomed the RBI's decision to cut repo rate by 50 basis points, but have also appealed to banks to pass on the benefits to consumers by easing the home loan rates. The reduction in the banks' lending rate is also expected to lower the borrowing cost of builders and ease the pressure on interest outgo.

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"The reduction will have a positive impact on developers' borrowing cost. However, operating performance of these companies should not deteriorate any further as credit ratings have already worsened and resulted in higher cost of borrowing," said Sandipan Pal, analyst, Motilal Oswal Securities. "To see improvement in operational performance of developers, we need more of price correction than interest rate reduction." Realty developers' debt levels have been mounting in the backdrop of low sales for some time now and a saving of 40-50 bps in interest cost would be significant, reckoned analysts. The total debt level of the top 15 listed realty developers stood at over Rs 54,567 crore as on FY15 end, against Rs 50,400 crore during 2012-13 end. Developers are also expecting the easing of cost burden to result in better prices for consumers. "It will be easier for developers launching new projects to pass on the savings on borrowing costs to consumers. These can be significant savings for both developers and homebuyers, given that a project usually takes about two years for launch after land acquisition," said Sandeep Runwal, director, Runwal Group.

 Prior to Tuesday's 50-bps cut, the central bank had earlier cut the repo rate by 75 basis points since January, but the net loan rate reduction by banks so far has not been more than 25-30 points. "This is a helpful move, but was long overdue. We now appeal to banks to pass on the rate reduction to consumers. They can now pass an entire 1% rate reduction to home loans," said Getamber Anand, president, CREDAI. "If that happens, this year's Diwali will see a revival in home sales momentum." Apart from the rate cut, the RBI has also announced that it will lower the risk weightage for lowcost home loans. 

With a view to improving "affordability of low-cost housing" for the economically weaker sections and low income groups and giving a fillip to "housing for all" initiative, the RBI has also proposed to reduce risk weights applicable to lower value but well collateralised individual housing loans, the RBI said in its policy statement. The central bank will separately issue detailed guidelines on this. "Risk weightage for home loans need to be halved to 25% from 50%. And not only for the economically weaker sections but across categories, because the NPA in home loan segment is less than 1% and it's justifiable to lower the risk weightage," said Niranjan Hiranandani, MD, Hiranandani Constructions. 
 

Source - ET

Home loan interest rates expected to come down

Bangalore

The inflation rate is under control and the given macroeconomic factors could lead to the RBI bringing down the key rates in its next monetary policy review later this month. The next Credit Policy review is due on September 29. As always, there are expectations of a reduction in the key interest rates. The expectations are strongly supported by the ground realities and requirements. Bankers expect the Reserve Bank of India (RBI) to cut the key rates later this month as the inflationary pressures seem under control.

The industry is already pushing strongly for a rate cut. The RBI has already made a 75 basis percentage points reduction this year in instalments. It is to be noted that although the inflationary pressures are still not completely under control, the government's food management and the minimal rise in support prices of farm products should help in keeping the inflation rate under control.

The RBI has observed that 'so far the inflation outcomes have closely tracked the projections'. A reduction in the key rates is also called for because of the stressed balance sheets of corporates and banks, low capacity utilisation, low oil prices and depreciating rupee.

Some macroeconomic factors will further help in the push for an interest rate reduction. The major supporting factor is the subdued inflation rate that has touched record lows, as well as the inflationary forces. It has been further supported by the falling crude oil prices.

Bankers expect the RBI to cut the policy repo rate from 7.25 percent at the next meeting. The consumer price data for July has shown the retail inflation rate at a record low of 3.78 percent, giving the RBI more room to ease the policy rates.

In order to inject more momentum in the economy and encourage investments, the government and corporates have requested the RBI to lower the interest rates. The Index of Industrial Production (IIP) data for the month of June came in at 3.80 percent as compared to the previous month's data of 2.70 percent, but we have to gear up much more in the manufacturing segment for higher growth.

An interest rate cut by the RBI is sure to boost investments. Further, it is apparent from the recent earnings of corporates that demand has not picked up in almost all the sectors. However, this earnings season was better than the March quarter. Though the corporate earnings' growth has been muted so far, it is expected that the markets will remain positive as the long-term growth story of the economy is intact. The GDP growth rate slipped to seven percent in the April-June quarter of 2015-16, from 7.50 percent in the preceding quarter.

Source - TOI Banglore 

Loan recovery eludes India's banks, even as growth rate beats China

NEW DELHI: A recovery in India's credit growth could elude the country's banks until early 2016, despite an economy that in the first three months of this year is expected to have outpaced China. 

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A 12.6 percent growth rate in lending in the fiscal year that ended on March 31 was the lowest in almost two decades, and would have been lower but for a surge in the last two weeks. In the two weeks to May 1, it slowed to 10.5 percent. 

Reporting earnings for the quarter ending in March, India's top bankers said they had seen an increased level of inquiries from firms and indivuduals. But there was no substantial rise in loans, meaning a full recovery could still be months away, as India's debt-burdened firms battle to get back on track. That lag contrasts with official growth figures that are expected to show this week that India's economy grew 7.4 percent last fiscal year — numbers likely to again confound economists and firms still suffering from slack demand. 

"The project pipeline which was very, very thin even last quarter, we are now beginning to see more and more projects coming in," said Arundhati Bhattacharya, chairman of State Bank of India, the country's largest bank. 

"My own anticipation is another two quarters down the line we should definitely begin to see this pick up happening, and the last quarter of the financial year... should be quite good." 

Bhattacharya forecast loan growth of 14 percent for the current financial year to March 2016 forSBI. That compares with an adjusted 10.5 percent in the year just ended. 

"People who meet us are all very hopeful and bullish on a recovery starting. Some queries have started coming for new proposals also, but not in a very big way," said Ashwani Kumar, chairman of state-owned Dena Bank. 

"This was not the scenario four or five months back." 

India's firms have seen debt levels nearly triple in the past five years and are struggling to digest debt already on their balance sheets after two years of weak economic expansion. 

"I look at infrastructure, and in this industry there is not much change. Banks are a little wary of lending to infrastructure because there have been delays and other problems," said Issac George, chief financial officer of infrastructure firm GVK. 

Although bank loans still account for bulk of the credit in India, another factor that has weighed on bank loans is cheaper availability of funds through commercial papers and bonds. 

Commercial paper issuances jumped more than 80 percent last fiscal year, according to estimates from rating agency ICRA. Including commercial papers, bonds and overseas borrowing, total credit available in the system grew 14.5 percent last year — outpacing growth in bank loans. 

"What is really hitting the credit growth for banks is that investments are not really picking up," said Vibha Batra, group head of financial sector ratings at ICRA. "Even if this investment proposals start coming in, it won't be before the second half that you would see a meaningful credit growth."

Source - Times Of India