Bank of Rajasthan slashes home loan rates to 7.50 per cent

Bank of Rajasthan, one of the oldest, technology driven and customer friendly private sector bank, has announced reduction in interest rates on home loan under “Apna Ghar Scheme” with effect from 09.11.2009.

Mumbai, Maharashtra, November 13, 2009 /India PRwire/ — The rates have been cut for the home loans up to Rs. 30 lakhs and over Rs. 30 lakhs at floating interest rates.

For housing loans up to Rs.30 lakhs, the floating interest will be charged at the rate of 7.50% per cent for the first year, 8.50% for the second and third year and 8.75% for 4th year & onwards, which is applicable for all maturity periods on the fresh loans.

For housing loans of above Rs.30 lakhs, the floating interest will be charged at the rate of 8.00% for the first year, 9.00% for the second & third year and 9.75% for the fourth year onwards, for all maturity periods.

About Bank of Rajasthan

Established way back in 1943, Bank of Rajasthan is one of the fastest growing private sector banks in the country, which has made rapid strides by making consistent profits for past several years. With a wide network of 463 branches in the entire length and breadth of the country, Bank of Rajasthan has emerged as one of the largest private sector banks in the country. The bank has made tremendous and historical progress during the last few years. The Bank has over 2 million customer base and offers ATM facilities at over 53,000 ATMs of all banks across the country. All the branches of bank spread over 286 cities across India in 22 states and 2 union territories are offering online services. The bank has covered 125 cities in Rajasthan alone.

Financial Highlights of Bank of Rajasthan

The bank had maintained its growth in net profit for the previous financial year 2008-09 as well. The net profit of the bank increased to Rs. 118 crore for the year ended March 31.2009 as against Rs. 115 crore for the previous year.

Source:http://www.indiaprwire.com/pressrelease/financial-services/2009111337514.htm

SBI’s 8% Home Loan Scheme will End on November 8th

The country’s largest lender, State Bank of India, will not extend its eight per cent home loan scheme, the cheapest in the country, beyond November 8. SBI had introduced its Happy Home loan scheme, that allowed the borrower to freeze the eight per cent interest rate for a year, in February this year. In August, the bank had introduced another home loan scheme under a ‘My Home’ campaign, in which it offered loans up to Rs 5 lakh and tenure for up to 10 years, at an eight per cent per annum fixed rate during the first five years, among other offers.

However, the My Home campaign will come to an end on November 8. “The bank has taken a decision that the eight per cent home loan scheme will not be extended beyond November 8. It is yet to take a decision on the new interest rates. It is likely to be more than eight per cent,” said sources at SBI. Under the My Home Campaign, the bank was offering home loans in three segments, namely, SBI Hi-Five Home Loan, SBI Easy Home Loan and SBI Advantage Home Loan. Under the SBI Hi-Five Home Loan, it has been offering loans up to Rs 5 lakh and tenure for up to 10 years at an eight per cent per annum fixed rate during the first five years. From the 61st month onwards, the rate will be a floating one, at an interest rate 2.75 per cent below the State Bank Advance Rate (SBAR) and 1.25 per cent below SBAR.

In SBI Easy Home Loan, for maximum loan of Rs 50 lakh and tenure of up to 25 years, the interest rate is fixed at eight per cent per annum during the first year and at 8.5 per cent during the second and the third year. After three years, the rate will be 2.75 per cent below SBAR (for floating rate) and 1.25 per cent below SBAR for fixed ones, with a reset frequency of five years. For loans above Rs 50 lakh and tenure of up to 25 years ( SBI Advantage Home Loan) , the rate is fixed at 8 per cent per annum during the first year and 9 per cent per annum during the second and third year. From the fourth year on, the rate will be 1.75 per cent below SBAR (for floating rate) and 0.75 per cent below SBAR for fixed ones, with reset frequency of five years.

http://www.indianrealtynews.com/home-loans/sbi%e2%80%99s-8-home-loan-scheme-will-end-on-november-8th.html

IDBI cuts home loan rates

Following its peers, Industrial development bank of India, IDBI , has slashed rates on fresh loans this festive season. The bank has reduced its car loan and home loan rates by 0.25-0.5 percent. The rates would come into effect from 1st October.

As per the new rates, for a home loan amounting to 30 lakh, a rate of 8.75 would be applicable as against the current 9 percent. Home loans within the range of 30-50 lakh would be charged 9 percent as against the existing 9.5 percent. Loans above 50 lakh would be charged an interest rate of 9.25 percent.

IDBI has targeted retail loans worth Rs 18,000 crore by March as against the current outstanding of Rs. 14,000 crore. It is likely to add 3200- crore fresh loans during the period, C S Jain, the bank’s head for personal banking group said.

Jain said that the banks deposit base is expected to increase to 67000- crore by the end of this fiscal from the current 50,000 crore. As part of its festive offer, the bank plans to offer 0.25 percent more interest for 6 months-1 year deposits, taken from October-1 to 31.

The bank recently tied up with Chevrolet for vehicle finance. The bank has put a cap of Rs 2500 on the processing fee for the vehicle loans. Fresh loans taken from October 1-December 31 would be charged 8.5 percent rate of interest against the existing 12 percent.

IDBI is also planning to increase the count of its branches from 602 to 1000 by the fiscal’s end, said the personal banking group head.

Besides this, IDBI also announced new schemes such as free fire and burglary insurance for current account holders, waiver of AMC charges on Demat account, Jain said.

http://www.rupeetimes.com/news/car_loans/idbi_cuts_home_loan_rates_2813.html

Recovery: Home loan rates poised for an upswing?

MUMBAI: “Home loans have traditionally been drivers of residential real estate growth and the EMI, which is governed by interest rates. They remain Buying house? Quote price

the ultimate barometer of a potential home buyer’s final decision to buy,” says Rajen Bandelkar, director, Raunak Group. As the perceived inauspicious period of Shraadh ends and the festive season begins, activity could once again pick up in the residential real estate segment. Consequently, it helps that home loan interest rates are lower than what they were at the beginning of last year, says Bandelkar.

How long will the low interest rates continue last though? Bandelkar, for one, hopes that a home loan interest rate hike does not happen soon. Harsh Roongta, CEO, Apna Paisa, agrees. “Interest rates may remain ‘as is’ during the next quarter. However, we may see some hardening of interest rates in early 2010,” feels Roongta.

If you look at macro-economic factors, a hike would seem inevitable, although it may be delayed by a couple of months, says Vinod Mishra, CMD, Gajanan Group. “The official statements, so far, have been about the revival of the economy. The finance minister (FM) recently said that the fiscal incentive packages would continue. This may indicate that there will be no imminent hikes in home loan interest rates. Moreover, we have three state assembly polls coming up soon. What will happen after the polls, vis-à-vis home loan interest rates, remains to be seen,” he says.

You have to take into account two factors, points out Narpat Mehta, director , Kanakia Group. “Firstly, global consultants have been picking up signals from the RBI, which suggest that curbing inflation will soon become a higher priority, than getting economic growth back to pre-crisis levels. One way of doing this would be to increase borrowing costs, meaning that home loan interest rates may not remain at the current low levels for long,” he points out.

“Secondly, in the past fortnight, the Indian economy has come out of the negative inflation zone, back to normal inflation. In this scenario, the RBI may again be forced to take measures, which may result in home loan interest rates going up,” he adds.

“The impact of hiked interest rates on home loans might happen with a slight lag, given that the appetite for home loans remains high,” adds Roongta. The consensus is clear – ‘fence sitters’ need to zero-in on their dream homes and lock in their home loan interest rates, at the earliest.

Source : http://economictimes.indiatimes.com/personal-finance/loan-centre/home-loans/analysis/Recovery-Home-loan-rates-poised-for-an-upswing/articleshow/5080375.cms

IDBI Bank opens 15 more branches & Reduced Home Loan Interest rates

Mumbai: State-owned IDBI Bank on Thursday opened 15 branches across the country to commemorate its 6th foundation day.

The bank has over 600 branches pan-India and 1,000 ATMs.

The lender will be undertaking a customer satisfaction survey to receive feedback from its clients, it said in a press release.

Early this week, IDBI Bank had cut its new home, auto loan rates by 0.25-0.5 per cent. With this, new rates for home loans up to Rs 30 lakh will be 8.75 per cent as against the existing 9 per cent.

Home loans between Rs 30 lakh and Rs 50 lakh will attract a rate of 9 per cent (9.5 per cent), while those above Rs 50 lakh will be priced at 9.25 per cent (9.5 per cent).

The bank has plans to hire around 7,000 more people this year, out of which 4,000 will be inducted in the personal banking group.

It would also offer moratorium period on payment of homeloan pre-EMI taken between October 1 to December 31.

This will enable the borrower avail the loan without a pre-EMI obligation till the possession of the new property for a period of 12-18 months from the date of disbursal, whichever is earlier.

IDBI Bank announced a host of special products such as free fire and burglary insurance for current account holders, waiver of AMC charges on demat account for the first year amongst others.

http://www.financialexpress.com/news/idbi-bank-opens-15-more-branches/523873/

GIC Housing cuts home loan rate

The housing finance outfit of General Insurance Corporation of India (GIC), GIC Housing Finance Ltd (GICHFL), has slashed its housing loan interest rate to an all-time low of 7.95 per cent, even as it chases a steep loan sanction target of Rs. 1,000 crore for 2009-10.

Till date, its loan sanction has been only about Rs. 450 crore, while disbursement is Rs. 350 crore against an annual target of Rs. 800 crore.

Sources told The Hindu that it was sending 1.5 crore mobile text messages to hawk the festival scheme, which opens on October 1, for a month.

However, indications are that it may remain open for a while, if an encouraging response is generated.

At present, GICHFL offers an interest rate of 8.5 per cent for six months on loans up to Rs. 30 lakh.

The current offering is the lowest in its 15-year history. “The signs of a recovery are evident and the next two quarters are expected to be better than those of 2007-08,” sources said.

However, while this would be the cheapest offer in the six month time-band with freebies like accidental death cover and property insurance cover, the company is also launching a scheme offering interest rate of 8.95 per cent which remains fixed for two years.

GICHFL’s average loan size is less than Rs. 10 lakh and the Centre’s proposed scheme of providing an interest subsidy of one percentage point for this bracket of loans brings down the effective rate to 6.95 per cent per annum.

Although a relatively small player in the housing finance market, GICHFL has a comfortable solvency position with a capital adequacy ratio of 17.5 per cent against the 12 per cent stipulated by the National Housing Bank.

Source:http://beta.thehindu.com/business/companies/article26715.ece

Home loan rates could go up soon

With the Indian economy showing positive signs of recovery, the home loan rates might increase. According to India’s second largest lender, ICICI bank, the interest rates could rise in the latter half of the fiscal.

“There is growth already seen in auto and home loans…In the latter part of this fiscal, I expect that project finances will also pick up…We will continue to focus on home, auto and infrastructure loan segments,” said Chanda kochhar,ICICI Bank’s Managing Director and CEO”

C Rangarajan, chairperson of the Prime minister’s EAC, expressed a similar view regarding the interest rates.

This week, the inflation rose by 0.12 per cent while it had fallen by 0.12 percent the preceding week. Inflation in India is measured on the basis of wholesale price index, which considers a basket of 435 commodities.

The likely increase in the lending rates could shatter your plans of buying a new house at cheaper rates. The rising inflation could force RBI to put a check on the liquidity in the market by increasing the lending rates and the CRR.

Realty firms may also suffer losses as people might decide against buying houses. The finance minister, Pranab Mukherjee, said that the government had been expecting this trend.

http://www.rupeetimes.com/news/home_loans/home_loan_rates_could_go_up_soon_2774.html

ICICI reduces rates for new home loans

New Delhi: The largest private sector bank, ICICI Bank, launched new home loan schemes at lower interest rates for new borrowers . Under the new offer, interest rates for up to Rs 20 lakh is 8.75%. For the loan between Rs 20-Rs 50 lakh, the new interest rate is 9.25% and 9.75% above that. The new scheme has already been made effective from August 20.

Except for the special offer , ICICI Bank’s interest rates are in the range of 9.25 % to 11%. Prior to this, the other major home loan lenders the SBI and HDFC Ltd have already cut their interest rates. SBI is charging only 8% on home loan for the first year. In the second and third year, the interest rates vary between 8.50% and 9.25% depending on the loan amount. However, from the fourth year onwards, the interest rates will be levied at the rate linked to the benchmark prime lending rate of bank. TNN

Source : http://lite.epaper.timesofindia.com/getpage.aspx?pageid=27&pagesize=&edid=&edlabel=CAP&mydateHid=27-08-2009&pubname=&edname=&publabel=TOI

PNB to cut home loan rate to 8.5% this week

As the festival season kicks off, so does the battle for the home loan market. Punjab National Bank (PNB) is all set to announce a competitive home loan rate to counter State Bank of India’s (SBI) low rate offering for the three months beginning August 8.
But at 8.5 per cent for three years, it is marginally higher than SBI’s offering. This rate will be for loans of upto Rs 30 lakh; for bigger loans, the rate would be 9.25 per cent or 25 basis points (100 basis points make 1 percentage point) lower than the current rate.

The bank is expected to announce this “festive offer” this week.

“This will be a part of the festive offering by the bank,” said a senior official who did not wish to be named.

Despite repeated attempts, top officials at the bank were unavailable for comment.

Between the two, SBI’s offer — 8 per cent in the first year for loan between Rs 5 lakh and Rs 50 lakh and 8.5 per cent for the next two — is cheaper. For Rs 5 lakh and below, the bank charges 8 per cent for five years.

PNB and SBI are not alone. Housing Development Finance Corporation (HDFC) reduced its rates in July to 8.75 per cent for loans upto Rs 15 lakh and 9 per cent for loans between Rs 15 lakh and Rs 30 lakh.

These are still higher than what is being offered by SBI and what PNB has planned.

Market leader ICICI Bank, however, has not revised its home loan rates — it charges an interest rate of 9.25 per cent for loans upto Rs 30 lakh and 9.75 per cent for loans between Rs 30 lakh and Rs 1 crore; beyond that it charges 10 per cent.

Source : http://www.tradingmarkets.com/.site/news/Stock%20News/2474299/

Lower Interest Rates cheers Gurgaon real estate market

Encouraged by price correction and lowering of interest rates, the real estate market, after a period of relative inactivity lasting the first few months of the year, witnessed improved levels of activity on the part of retail investors in the residential sector, especially in the low to mid-end housing segment, said experts as well as market analysis reports of the second quarter in 2009.

CBRE Market View, India Office , published for the second quarter, said: “Level of enquiries went up and, more significantly, transaction velocity also increased marginally as compared to Q1 (first quarter) of 2009… However with most of the activity confined to smaller format offices, vacancy levels remain high. Most developers deferred plans for launching any new projects, the focus being on deploying the scarce resources on completing projects in hand.”

Source : http://www.indianrealtynews.com/real-estate-india/lower-interest-rates-cheers-gurgaon-real-estate-market.html

India Cuts Home Loan Rates, Some Taxes to Boost Growth Further

July 27 (Bloomberg) — India’s Finance Minister Pranab Mukherjee today lowered the interest rate on some home loans and reduced the tax burden for select industries, adding to four stimulus packages to revive a slowing economy.

The government will provide an interest-rate subsidy of 1 percent for loans of as much as 1 million rupees ($20,800) given for homes that don’t cost more than 2 million rupees, Mukherjee said, announcing amendments to the budget that was approved by parliament today.

The stimulus comes after Mukherjee’s July 6 budget that provided more funds for building roads, ports, utilities and reduced the tax burden on individual incomes to buoy demand and spur an economy growing at the slowest pace since 2003.

The central bank, which has reduced interest rates six times since October last year, will review monetary policy tomorrow in Mumbai.

“In the medium term, we must enhance internal demand,” Mukherjee said, replying to the budget debate in parliament in New Delhi today. “The fiscal stimulus which we have provided to confront the situation has paid dividends.”

India also extended a tax break for companies engaged in building industrial parks by two years to March 31, 2011, and exempted companies engaged in the repair and maintenance of roads from paying service tax.

India’s $1.2 trillion economy may expand 7 percent in the year to March 2010, the finance minister said July 6. Higher government spending resulted in the Indian economy stabilizing in the first quarter, maintaining the 5.8 percent pace of expansion recorded in the preceding three months.

Central Bank’s Forecast

India’s economy may grow at a faster pace than earlier forecast this year, the central bank said today.

Asia’s third-largest economy may expand 6.5 percent in the year ending March 31, the Reserve Bank of India said, citing a survey of eight estimates it conducted in June from agencies including the World Bank and the Asian Development Bank. The survey in March had estimated a 5.7 percent gain.

“We have chosen the path of higher spending to ensure that we can have a reasonable growth rate in the current year and return to a higher growth trajectory,” soon, Mukherjee said.

India needs 4 percent farm growth to achieve a 9 percent economic growth, the minister said.

India’s economy grew 6.7 percent in the year to March 2009, the slowest pace of expansion since 2003. Growth averaged 8.5 percent in the previous five years.

Mukherjee eased the tax burden on consumers and companies and boosted government spending to increase rural jobs in his July 6 budget to protect the economy from the impact of the worst global economic recession since the Great Depression.

The government also announced a tax holiday on profits from housing projects approved between April 1, 2007, and March 31, 2008, provided they are completed on or before March 31, 2012.

“I expect the developers to pass on the benefit of tax holidays to the buyers of these houses,” Mukherjee said.

Source : http://www.bloomberg.com/apps/news?pid=20601091&sid=aPQweZ.P2OfI

Interest rates may go up in 6 months: SBI

KOLKATA: The interest rate might go up by 25-100 basis points (0.25%-1%) in next six months period, SBI chairman O P Bhatt reiterated on Monday, adding that the behaviour of interest rate will largely depend on the liquidity in the market as well as fiscal management. It may be noted that Union finance minister Pranab Mukherjee on Sunday said that the government would ensure that the rates do not go up through proper fiscal management. According to Bhat, the interest rate may firm up after the busy season credit policy. Bhatt added that a minor increase in interest rate would not affect corporates in a big way. “As per the data available, the interest cost is just 8%-9% of the total cost of top 1,000 listed companies. So, an increase in rates by even 100 basis points will not affect the corporate sector significantly. Only there will be a little pressure on the bottomline,” he added. Elaborating the current credit scenario, he said that there is huge liquidity in the banking system. But the loan offtake is very low. “Banks have put over Rs 1 lakh crore with RBI because we have no other options. The credit growth is slow. Even in home loan segment the credit growth is lacklustre. Even after offering as low as 8% interest rate we are not getting adequate home loan customers,” he added. According to him, SBI alone is losing Rs 100 crore every month because of low credit offtake. Bhatt said the net interest margin (NIM) of SBI has come down to 2.32 from 3.16 in last few quarters. “We need a minimum level of NIM to survive,” he added. Bhatt indicated that NIM of 3 would be comfortable. The proposed general insurance venture of SBI will be in place by early 2010. SBI chairman said that it has already received go-ahead from IRDA for the non life venture. Incidentally, SBI is forming a JV with IAG of Australia for the general insurance company. According to Bhatt, the proposed JV for custodian services will be ready in next 4-5 months. Incidentally, SBI is forming a JV with Societe Generale Securities Services for the JV. SBI will hold 65% in the JV firm. Source : http://timesofindia.indiatimes.com/articleshow/4774376.cms

SBI launches two new home loan products at attractive rates

With this latest reduction, the third by LIC Housing Finance in the calendar year, the total reduction has reached 200 basis points in the last six months

Mumbai: The country’s largest lender State Bank of India on Tuesday introduced a new home loan scheme under which it offer loans up to Rs30 lakh at fixed rates of 8% for the first year and 9% for the next two years.

The bank’s earlier offer of home loans at a fixed rate of 8% for the first year ended Tuesday.
Under the new scheme, customers will have two options in the fourth year: a floating rate at 2% below State Bank Advance Rate (SBAR), which is currently at 11.75%,, or a fixed rate of 1% below SBAR with a five year re-set. A re-set means new rates will come into effect at the end of the specified period.

For loans above Rs30 lakh, the interest rate charged from the fourth year will be either a floating rate at 1% below the existing SBAR or a fixed rate of 0.5% below SBAR with a five year re-set.

SBI has a home loan portfolio of at least Rs56,000 crore.
The Indian Banks’ Association (IBA) and member public sector banks in December had announced home loans, in which borrowing of up to Rs5 lakh was offered at 8.5%, and between Rs5 lakh and Rs20 lakh at 9.25%. Both rates were fixed for five years. However, SBI launched its own scheme instead of the five-year fixed rate scheme, offering a lower rate of 8% fixed for only one year.

The IBA scheme also ended Tuesday. According to a senior banker with a large public sector bank, IBA will likely come up with a new home loan scheme within a day or two similar to the scheme introduced in December last year.
In a separate development, LIC (Life Insurance Corporation) Housing Finance on Tuesday announced a reduction in interest rates for its existing home loan borrowers. The floating interest rates for existing customers will now be reduced by 50 basis points on EMIs due on 1 July and payable on 1 August, a company statement said. One basis point is one hundredth of a percentage point.
With this latest reduction, the third by LIC Housing Finance in the calendar year, the total reduction has reached 200 basis points in the last six months.

The company had earlier reduced 1.50% for existing home loan borrowers in two tranches of 75 basis points each in January and April.

http://www.livemint.com/2009/06/30170440/SBI-launches-two-new-home-loan.html?h=B

Banks set to cut rates after meeting with FM next week

Mumbai: In what could be the last round of rate cuts in this cycle, public sector banks are expected to pare their loan rates next week after their meeting with finance minister Pranab Mukherjee.
At least three senior public sector bankers, who spoke on condition of anonymity, told Mint they would cut their loan rates as the rates on deposits have already come down. All three of them indicated an around 50-75 basis points cut in loan rates.
One basis point is one hundredth of a percentage point.
More cuts: Since their last meeting with finance minister Pranab Mukherjee in February, banks have pared loan as well as deposit rates. Harikrishna Katragadda / MintCurrently, Punjab National Bank (PNB) has the lowest prime lending rate (PLR) of 11%. State Bank of India, the country’s largest lender, has a PLR of 12.25% and most of the other public sector banks’ PLR ranges between 12% and 12.50%. In case of private banks, the PLR ranges between 14% and 16%. Banks are expected to offer loans at PLR to their best borrowers.
It is not known whether PNB, too, will cut its PLR and bring it down to 10.5%, the lowest public sector banks’ PLR has been since 2004. At that point of time, the yield on 10-year government bond, a barometer of the market rate, was moving in the range of 5.5% and 6%.Currently, the yield on 10-year benchmark paper is 6.67%.
In 2004, the Reserve Bank of India’s (RBI) policy rate was 6%. Since September 2008 in the wake of the collapse of Wall Street investment bank Lehman Brothers Holdings Inc. that plunged the global financial system into an unprecedented liquidity crunch, RBI has brought down its policy rate from 9% to 3.25%, lower than the administered bank savings rate of 3.5%.

Since the last meeting with the finance minister, in February, banks have pared their loan rates by 100-150 basis points and deposit rates even more sharply.

According to people in the finance ministry, lowering loan rates will spur growth, but in private, bankers confide they don’t have much room to go for a sharp cut in loan rates. If indeed the ministry “forces” them to cut rates drastically, their profitability will be hit as the net interest margin, or the difference between the cost of funds and their earnings on loans, will shrink.

Economists do not see too much scope for a loan rate cut as, according to them, the wholesale price-based inflation, which is now 0.61%, will rise as oil prices have started to go up and petroleum minister Murli Deora has recently hinted at deregulation of domestic oil prices.

There are also signs of a global recovery and India’s gross domestic product for the March quarter grew at 5.8%, against economists’ expectations of 5%.

In a research note dated 29 May, Nomura Financial Advisory and Securities Ltd’s India economist Sonal Varma said “the rate cutting cycle has ended”.
“… Headwinds still remain in the form of a weak global economy, but we believe that the initial conditions for a gradual domestic-demand led recovery are now in place… We are now pulling out our last 25 basis points policy rate cut and now judge that the rate-cutting cycle has ended,” Varma said.

According to Goldman Sachs India economist Tushar Poddar, the policy rates are near all time low now, but banks have not fully passed on the low rates to their customers.

“With the lags in policy rates on the one hand, bank lending rates and economic activity on the other, further cuts in policy rates may impact demand only in FY11, when demand and inflationary pressures will likely be picking up,” Poddar said in a 1 June report.
Given a choice, bankers are not willing to cut their PLR as most of the loans are disbursed below PLR in any case.

“Whenever we cut PLR, all loans linked to PLR are repriced immediately,” said a chairman of a public sector bank based in southern India on condition of anonymity. “The negotiation part on sub-PLR loans is the biggest challenge for us, not the rate cut. I don’t have room for more than 50-75 basis points cut from the present level,” he added.
Banks give small agricultural loans and export loans at below PLR. Besides, big corporate customers, too, access bank loans at less than the prime loan rates.

Cash-starved public sector banks raised their one-year deposit rates to 10.5% in September. Since then, the rates have gone down to 7.5-8.5%, but these rates are applicable to new deposits and banks are required to pay the old rates to the existing deposits till they mature.
“It could be the last of the rate cuts for us in immediate term. The cost of deposits will go up if the economy revives and liquidity will again be tight. It all depends how RBI provides liquidity,” said a Mumbai-based bank chairman, who declined to be identified.
Some economists, however, expect the soft rate regime to continue till the second half of fiscal 2011.

In a research noted dated 1 June, Banc of America Securities-Merrill Lynch economist Indranil Sen Gupta pointed out that the current gap between the 10-year bond yield and the PLRs of banks, at about 550 basis points, is too high to sustain and should come down
“This should protect our soft lending rate regime until second half of FY11,” Sen Gupta said in his report.

Source : http://www.livemint.com/2009/06/02233206/Banks-set-to-cut-rates-after-m.html?h=B

PSU banks told to cut lending rates further

The government on Thursday asked public sector banks to further lower lending rates to provide a boost to sagging industrial activity.

In a meeting of public sector banks and the Federation of Indian Chambers of Commerce and Industry (Ficci) and Confederation of Indian Industry (CII), cabinet secretary K M Chandrasekhar said there was room for further rate cuts, though banks had significantly lowered the rates recently.
“Public sector banks have been lending and the overall credit growth has been over 24 per cent year-on-year. The lending rates have come down significantly in the past few weeks and are at their July 2007 levels. We have given them (banks) the message that we are in a situation where all of us have to work together and they have to see to what extent they can further pare interest rates,” Chandrashekhar told media after the three-hour long meeting.

He said banks would have to look at lowering the rates. They would take a decision based on their economics, because it had to be related to the deposit rates.
“One point that came out very clearly from industry was that the stimulus packages are working. There is general appreciation of the work done. The point is: what more can we do.”

The meeting also discussed provisioning norms and loan restructuring by public sector banks. It was decided to set up a group of representatives of the government, the Reserve Bank of India (RBI), the Indian Banks’ Association (IBA) and industry. It will meet periodically to discuss issues relating to different sectors.

“Procedures followed by RBI (on faster restructuring and lower provisioning) were discussed and the RBI deputy governor (Usha Thorat) said these issues would be looked into with priority,” the cabinet secretary added.
Amitabh Verma, joint secretary, banking, said bankers had expressed concerns about provisioning requirements for restructured loans, saying the norms needed to be eased. Asked if lower inflation called for a further reduction in interest rates, Verma pointed out that the consumer price index was still high.

Although the wholesale price index has come down drastically to 0.31 per cent, the consumer price index is still in double digits.

Ficci president Harsh Pati Singhania said industry was still getting advances at 11 to 12 per cent. The effective interest rates needed to be in single digit to revive growth and demand.
“Mid-cap and small and medium enterprises are getting credit at 14 to 15 per cent. Even for large companies the rate is between 11 and 12 per cent. Since the wholesale price index has fallen to almost zero, these rates need to be brought down. “Everywhere else in the world, real interest rates are at 3 to 5 per cent,” he said.
Lending to the housing sector was also discussed, but housing secretary Kiran Dhingra, who attended the meeting, declined to give details.

Planning commission secretary Subas Pani said the discussion was mainly on credit flow and credit availability to various sectors.

The 10 banks which attended the meeting are the State Bank of India, Punjab National Bank, Bank of India, Bank of Baroda, Union Bank of India, IDBI Bank, Central Bank, Canara Bank, Indian Overseas Bank and Allahabad Bank.

Source : http://www.mydigitalfc.com/news/psu-banks-told-cut-lending-rates-further-868

Interest rate cuts, offers bring first-timers to housing market

Renu Sud Karnad, joint managing director of HDFC, the country’s largest mortgage player, said she saw “increased interest” from first-time house buyers, courtesy the correction in property prices, interest rate cuts and developers introducing affordable housing by resizing the offered areas.

Property developers agree.

Consider this:

- HDIL Ltd launched a housing project at Kurla, a central suburb of Mumbai, in February, at a price 30 per cent lower than market rates. More than half its sales came from first-time home buyers. Of the 756 units on offer, the developer has already sold 575.

- About 85 per cent of the 500 flats at DLF Westend Heights in Bangalore have already been sold. The project was aimed at information technology professionals and the flats were priced 24 per cent less than market rates. DLF says about 60 per cent of the buyers are first-time house owners.

- Unitech, which launched Uniworld Gardens–II at Sohna Road, Gurgaon, and cut prices by more than 20 per cent, has sold more than half the flats. It now plans to launch affordable housing projects in the Rs 5-10 lakh range in Chennai, Kolkata and other cities.

Bankers also see a sharp rise in enquiries from first-time buyers, after an 18-month hiatus. Bank of India Executive Director M Narendra said many first-time buyers were coming to the bank for loans as the availability of affordable projects had increased.

Cuts in interest rates and property prices have improved affordability. First-time buyers have been a huge beneficiary of the former. Every 0.5 per cent increase in the interest rate reduces home loan eligibility by about 7 per cent, shows a study by Liases Foras, a real estate rating & research agency. Liases said real estate would attain the 2005 efficiency if home loan rates came down to 7.5 per cent and property prices fall by 5 per cent. The risk spread in the real estate sector would then be negligible.

First-time home buyers have stayed away from the market ever since developers, in a bid to cash in on the market sentiment, focused on launching luxurious projects, bigger in size and priced beyond the reach of average buyers.

Property prices across India more than tripled from 2003-07, owing to rising incomes, mortgage availability at inexpensive rates, higher tax benefits and speculators flocking to the market.

As a result, inventory levels of property jumped to 40 months of equivalent sales, compared with eight months or lower a few years ago, said Pankaj Kapoor, CEO of Liases Foras.

However, some analysts and experts said it might be difficult to sustain the momentum as several genuine buyers were expecting a further drop in prices and uncertainty in the job market might make matters worse.

Source : http://www.business-standard.com/india/news/interest-rate-cuts-offers-bring-first-timers-to-housing-market/353164/

Home loan rates may drop again, say analysts

Home loan interest rates, especially on new home loan accounts, started softening from the beginning of this year when the Reserve Bank of India

(RBI) announced sharp cuts in the repo rate and cash reserve ratio (CRR). The RBI started slashing the key policy rates since October last year, after taking into account the worsening liquidity situation of banks here. The central bank has reduced its key policy interest rates (repo and reverse repo) and reserve ratio (CRR) four times in the last six months.

The cut in the repo rate meant commercial banks would have funds available at a lower cost. On the other hand, the cut in the CRR meant banks would have to keep less money with the RBI and hence they had more money to lend. Analysts believe that interest rates have not yet bottomed out and there will be further cuts in borrowing rates over the next few months.

These are some of the factors that are expected to bring the interest rates on home loans further down:

RBI moves

Analysts believe that banks have not yet passed on the entire benefits of lower interest rates (especially to existing home loan borrowers). This is because banks fix the interest rates based on the concept of net interest margin (the difference between average yield on advances and average cost of deposits). Usually, banks like to keep this spread (net interest margin) above three percent.

Banks are locked-in with higher interest rate deposits from the public for certain maturity periods and these deposits cannot be terminated in view of the prevailing market conditions . Therefore, the interest rates on existing loans cannot be lowered immediately. Meanwhile, the RBI and government are pressurising banks to slash the interest rates on existing loans as well.

Liquidity

The consumer sentiments have dropped drastically due to the global slowdown. The RBI encouraged banks to increase the credit inflow to the economy by increasing the bank credit target to 24 percent from 20 percent in the recent policy reviews.

The RBI also increased the money supply target to 19 percent from the current 16.5 to 17 percent levels. This will help increase the liquidity in the market, and also help in easy availability of loans.

Inflation rate drop

The inflation rate has come down drastically to around 2.3 percent for the week ended February 28 from its peak of 12.9 percent recorded in August last year. Analysts believe the inflation rate will go down further and may end up lower than two percent by the end of this month itself.

Some analysts believe there might be a negative inflation rate in a couple of months if the market conditions remain bad due to the higher base Tips for home loan borrowers
Home loan: Documents you need
Tax deduction on home loan
effect of last year. It will prompt the RBI to cut the policy rates further and that will have a direct influence on home loan interest rates.

Go for it

Borrowers should take note of these factors to track the movement of home loan interest rates. However, it is not prudent for all to keep waiting with their fingers crossed. Many banks have recently announced home loan rate cuts and people should not expect another rate cut in the next few weeks again. There are many attractive deals available for new home loan borrowers in the market. People who have already finalised on a property can choose from these available home loan offers.

A borrower should analyse the various aspects of home loans first. You should gather as much information as you can about the home loan product and lender you choose. You can consult those who have already taken a loan and gone through such an exercise.

Here are some important factors borrowers should analyse while going in for a home loan:

Charges

Understand the various charges, fees and penalties that the bank will charge at the beginning of the loan, during the loan tenure and at the time of termination of the loan. Some banks push for home loan insurance cover. You should weigh your risk profile carefully before choosing the insurance product .

Track record

Since a housing loan is a long-term relationship with the bank, you should look at the track record (trigger and frequency) of revising the home loan interest rates, in the last few years.

Flexibility
You should also look at the flexibility of charges on EMI revisions, part-prepayments and foreclosure of your home loan.

Source : http://economictimes.indiatimes.com/Features/Financial_Times/Home_loan_rates_may_drop_again_say_analysts_/articleshow/4298688.cms?curpg=2

LIC Housing cuts home loan rates

In January, the company had reduced its lending rates by 75 basis points for the existing customers

Mumbai: Leading mortgage financier LIC Housing Finance on Monday cut its home loan rates by 75 basis points for existing customers effective from 1 April.
“We have cut lending rates for existing customers by (75 basis points) from April 1. We have seen our cost of funds coming down in the recent period and this decision (to cut rates) is in consequent to that,” LIC Housing Finance (LICHFL) director and chief executive R.R. Nair said .

With the reduction, borrowers can now avail of loans at 10-10.5% against 10.75-11.25% earlier, Nair said.

In January, the company had reduced its lending rates by 75 bps for the existing customers.
“We have reduced our interest rates by (150 bps) since January this year. We are now offering rates that are lowest in two years,” he said.

Source :http://www.livemint.com/2009/03/16172959/LIC-Housing-cuts-home-loan-rat.html

Interest rates likely to fall below 2006 levels

After discussion on the rate cut amongst the Finance Ministry, the Reserve Bank of India (RBI) and the Indian Banks Association (IBA), retail loans are expected to come down further to a 3 year low level.

The interest rates on retail credit that comprise of home loans, auto loans and personal loans are likely to slash if the inflation rate in the country continue to fall. It is thereby expected to stimulate demand in the housing and other such sectors that are sensitive to the rate changes. Moreover it will assist the economic demand through the general rise in consumption level.

The interest rates have been declining since the past few months due to a host of measures taken by the RBI. The home loan rates that were some where between of 9.25% and 12% at the end of September 2008 have dropped to a range of 8% to 11%. In 2006 these home loan rates were around 7.75% at floating interest rates. The floating rates are all linked to the benchmark prime lending rates of the banks.

The loan rates over that the past three years have been analyzed the finance ministry and as per them, interest rates have come down by a substantial number and yet another 100 to 150 basis points fall is expected in the coming months. This will thereby make the interest rates fall below the lowest level in the recent past.

An official with the finance ministry said, “The rate of inflation is soon expected to come down to 3%. Key monetary and policy rates of the RBI are also at their lowest in many years. In such a situation, we see no reason why interest rates should not come down by another 1 or 1.5 percentage points.”

Presently the prime lending rate (PLR) of most banks range between 11.5% and 12.5%. This is closer to the interest rate levels in the range of 10.25% to11.50% that prevailed as on April 1, 2006. This is the rate to which most retail loans of the banks are linked and therefore a reduction in this benchmark rate prompts banks to slash interest rates of all PLR based loans.

Recently the banks have starting slashing their PLR rate and a corresponding reduction in rate of interest on loans linked to it. These cuts are valid for both existing and new customers of the banks.

While the key policy rates are already below the April 2006 levels. Currently the repo and reverse rates stand at 5.5% and 4.5 respectively as compared to the 6.5% and 5.5% in 2006.

Source : http://www.rupeetimes.com/news/car_loans/interest_rates_likely_to_fall_below_2006_levels_2125.html

State-run banks look set to cut rates on RBI cues

NEW DELHI (Reuters) – State-run banks are likely to cut lending rates following cues from the Reserve Bank and a government looking to pump-prime the flagging economy, bankers and government officials said on Monday.

At least four banks, including the largest lender State Bank of India, after a meeting with the finance minister said they would review their lending rates, while a finance ministry official said rates were “still on the higher side.”

With palpable signs of a slowdown in Asia’s third largest economy, the central bank began cutting its key short term lending rate in October. By January, the key short term lending rate was reduced by 350 basis points to an 8-½ year low of 5.5 percent, but banks have not passed all of that to customers.

The benchmark prime lending rate of state-run banks declined by just 1.25-2 percentage points in the period, the central bank noted in its quarterly review last month, saying there was “significant room for further reduction”.

“The transmission of the rate signal, however, has been subdued in the credit market,” according to an government report prepared ahead of a meeting of the finance minister with bank chiefs on Monday.

Corporates have said the high rates, along with drying of credit sources, have hit growth and crimped profitability. The Indian economy is seen expanding at 7 percent or lower in the year to March, compared with 9 percent or more growth in the last three years.

The finance ministry official, who did not want to be named, said the smaller banks were expected to follow the lead of the top two state-run banks in reducing loan rates.

Last week, State Bank of India cut home loan rates to 8 percent from between 9.75 and 12.25 percent, while Punjab National Bank cut its benchmark prime lending rate by 1 percentage point to 11.50 percent.

“Credit flows to the housing and the real estate sector needs to be supported and the cost of credit moderated,” the official told reporters ahead of the meeting.

State Bank’s Chairman O.P. Bhat said the bank was considering cutting its rates, and the short-term bias was for interest rates to fall as liquidity was comfortable.

Corporation Bank Chairman J.M. Garg said the bank would cut lending rates by 50-100 basis points, while UCO Bank’s chairman said there was scope for a 200 basis point cut in rates, in 2-3 steps.

Canara Bank Chairman A.C. Mahajan said a decision would be taken within the month on rates.

But deposit rates had to come down before banks could make deeper cuts in their lending rates, the bankers said, a view backed by Finance Secretary Arun Ramanathan.

“I guess when the deposit rates get moderated, (lending) rates will also soften,” Ramanathan told reporters after the meeting. “That is the general expectation.”

Source : http://in.reuters.com/article/businessNews/idINIndia-37784620090202?pageNumber=2&virtualBrandChannel=0

SBI unveils special home loan scheme

All customers of SBI who have already taken a loan under a special scheme will also benefit under the new offer

State Bank of India (SBI) has slashed interest rate on new home loans at a fixed rate of 8%. This rate will be applicable to all new home loan borrowers irrespective of the loan amount.

However, the fixed rate of 8% will be effective for only one year. After that, these borrowers will have to pay the earlier contracted rate which in the case of special scheme borrowers will be 8.5% for loans up to Rs5 lakh and 9.25% for loans up to Rs 20 lakh.

All customers of SBI who have already taken a loan under a special scheme will also benefit under the new offer.

For home loans above Rs20 lakh, SBI will charge the prevailing home loan rates.

SBI has said that the offer is applicable only up to April 30.

Existing customers can also avail of the new home loan scheme. They can borrow up to 10% of their exposure subject to a cap of Rs5 lakh at 8%.

Source :  http://www.indiainfoline.com/news/innernews.asp?storyId=92020&lmn=1

HDFC Deducts Interest Rates on Home Loan for New Borrowers

Housing Development Finance Corp (HDFC), the largest home loan lender is cutting interest rates on home loans. This comes after it cut rates in mid December by 0.5 per cent. It says it is looking to reduce home loan rates for new borrowers.

HDFC Says, new home loans upto Rs 30 lahk to be available at 9.75 per cent and home loans above Rs 30 lakh to be available at 10.75 per cent. Decision of home loan rate cut is to be formally announced on Monday. In December HDFC had reduced interest rates by 0.5 per cent. For Rs 20 lakh loan interest rate was cut to 10.25 per cent while loans above Rs 20 lakh, rate was cut to 11.25 per cent.

Source : http://www.indianrealtynews.com/home-loans/hdfc-deducts-interest-rates-home-loans-for-new-borrowers.html

Home loan interest rates on their way down

The high interest rate regime lasted a couple of years. The interest rates started peaking around the middle of last year. Finally, they started  softening from October 2008 when the Reserve Bank of India (RBI) announced sharp cuts in the repo rate and cash reserve ratio (CRR). The cut in the repo rate meant banks would have funds available at a lower cost. On the other hand, the cut in the CRR meant banks would have to keep less money with the RBI, and hence had more money to lend.

Prime lending rates cut

In order to boost demand, the government put pressure on banks to cut rates. But most banks did not pass on the rate cut benefit to all customers. They did not cut their prime lending rates (PLRs) immediately. Instead, they announced reduced interest rates on new loans – up to Rs 20 lakhs. This is because banks were locked in with higher interest rate deposits. They had to wait for the initial sentiments to settle down before cutting the PLR. Slowly, with competitive pressure and settlement of higher interest rate deposits, banks passed on the benefits to all customers by cutting the PLR last month. This process took a couple of months from the time the RBI announced the rate cuts.

Stimulus package to boost consumer sentiment

The RBI and government have announced another stimulus package last week in order to boost the confidence and sentiments of domestic consumers. A more positive consumer sentiment is expected to result in higher demand and hence higher GDP growth. As part of the monetary policy measures, the RBI announced sharp cut in the CRR, repo and reverse repo rates. The key monetary policy parameters have come down sharply from their peak in September 2008, over the last three months.

The government is hopeful banks will pass on the interest rate cuts to the borrowers. However, many banks have indicated clearly that rate cuts are certain in future. Just how much the rates will drop will depend on several factors including amount of higher interest rate bearing deposits, inflation, risk profile, and loan amount. Analysts believe banks will start cutting rates over the next 6-8 weeks. There may be a 1-2 percent drop in banks’ PLR by the end of March this year, provided the inflation rate drops below five percent.

Experts believe that next few months are very good for people looking at investing in a property. Property prices have corrected and home loan interest rates are heading downwards.

In a soft monetary policy environment, people planning to take a loan should opt for the floating rate of interest option. In a floating interest rate account, the rate of interest is linked to the bank’s PLR. The interest rate comes down if the bank reduces its PLR and vice versa. Since the interest rates are expected to come down in future, borrowers should choose the floating rate option. If the bank reduces its PLR in future, the borrower will automatically get the benefit of a lower interest rate.

It is also important to check other options offered by banks while taking a home loan. For example, the option and cost of switching from a floating to fixed interest rate scheme, conditions of foreclosure or partial prepayments etc. Borrowers can use the option of switching from a floating interest rate to a fixed interest rate in future, when the interest rates bottom out.

Expectations of further cuts

Analysts believe there may not be further cuts in the monetary policy parameters (repo rate, reverse repo rate and CRR) in the next 6-9 months. This is because the RBI has already announced rate cuts three times in the last three months. The RBI will wait and watch the effect of these cuts on the economy and domestic demand over the next few months. Experts believe it will take 6-9 months before we see the effect of these monetary policy measures on the economic data.

Source : http://economictimes.indiatimes.com/Features/Financial_Times/Home_loan_interest_rates_on_their_way_down/articleshow/msid-3962413,curpg-2.cms

Allahabad Bank cuts PLR rate by 75 basis points

MUMBAI: Soon after the Reserve Bank announced cut in key policy rates, state-run Allahabad Bank on Friday announced reduction in the benchmark  lending rate by 75 basis points to 12.5 per cent, with effect from January 5.

The bank has decided to reduce its Benchmark Prime Lending Rate (BPLR) from 13.25 per cent to 12.5 per cent effective from January 5, Allahabad Bank said in a filing to the Bombay Stock Exchange.

The bank last reduced the BPLR by 75 basis points to 13.25 per cent in November, 2008.

RBI today cut Cash Reserve Ratio by 50 basis points to five per cent, short-term lending (repo) rate by 100 basis points to 5.5 per cent and short-term borrowing (reverse repo) rate by similar per centage points at four per cent with immediate effect.

The cut in CRR would lead to infusion of Rs 20,000 crore into the system over and above Rs 3,00,000 crore injected since October 2008.

Meanwhile, housing finance subsidiary of Punjab National Bank, PNB Housing Finance, also reduced interest rate on home loans between 1.50 and 1.75 per cent.

The rates of interest rate for all existing borrowers have also been reduced due to reduction in the benchmark PLR with effect from yesterday, PNB Housing Finance said in a release.

Floating rate up to Rs 20 lakh has been pegged at 10.25 per cent, while above Rs 20 lakh it has been revised to 11.25 per cent.

All the public sector banks are offering home loan between Rs 5 and 15 lakh at 9.25 per cent interest.

Source : MUMBAI: Soon after the Reserve Bank announced cut in key policy rates, state-run Allahabad Bank on Friday announced reduction in the benchmark  lending rate by 75 basis points to 12.5 per cent, with effect from January 5.

The bank has decided to reduce its Benchmark Prime Lending Rate (BPLR) from 13.25 per cent to 12.5 per cent effective from January 5, Allahabad Bank said in a filing to the Bombay Stock Exchange.

The bank last reduced the BPLR by 75 basis points to 13.25 per cent in November, 2008.

RBI today cut Cash Reserve Ratio by 50 basis points to five per cent, short-term lending (repo) rate by 100 basis points to 5.5 per cent and short-term borrowing (reverse repo) rate by similar per centage points at four per cent with immediate effect.

The cut in CRR would lead to infusion of Rs 20,000 crore into the system over and above Rs 3,00,000 crore injected since October 2008.

Meanwhile, housing finance subsidiary of Punjab National Bank, PNB Housing Finance, also reduced interest rate on home loans between 1.50 and 1.75 per cent.

The rates of interest rate for all existing borrowers have also been reduced due to reduction in the benchmark PLR with effect from yesterday, PNB Housing Finance said in a release.

Floating rate up to Rs 20 lakh has been pegged at 10.25 per cent, while above Rs 20 lakh it has been revised to 11.25 per cent.

All the public sector banks are offering home loan between Rs 5 and 15 lakh at 9.25 per cent interest.

Source : http://economictimes.indiatimes.com/News/News_By_Industry/Banking_Finance_/Allahabad_Bank_cuts_PLR_rate_by_75_basis_points/articleshow/3928179.cms

Housing finance companies to cut rates from January

Following the leaders, the second-tier housing finance companies (HFCs) are also lining up special schemes for the sub-Rs 20 lakh loan category. This will bring cheer to a wider section of fresh borrowers.

Second-rung HFCs planning to reduce interest rates are Dewan Housing Finance Corporation (DHFL), GIC Housing Finance Company and DHFL Vysya Housing Finance among others. They may reduce interest rates by 1-1.5 percentage points on loans up to Rs 20 lakh. These lenders also plan to reduce rates for existing borrowers, albeit by a lesser extent.

GIC Housing Finance, which has a home loan portfolio of Rs 2,800 crore, has decided to reduce interest rates by 1-1 .5 percentage points for fresh borrowers . Accordingly, for loans below Rs 20 lakh, it will charge 10.25% per annum for 5-15 years and 10.5% a year for over 15 years.

DHFL, which has a home loan portfolio of around Rs 5,000 crore, is yet to finalise its plan. It may offer special interest rates for both sub-Rs 20 lakh and sub-Rs 5 lakh loan categories. Its subsidiary DHFL Vysya Housing Finance also plans to introduce special rates for new home loan takers.

These players have taken the cue from public sector banks and the market leader Housing Development Finance Corporation. Following the government’s diktat, public sector banks have created a concession rate of 9.25% for home loans below Rs 20 lakh and 8.5% for loans less than Rs 5 lakh. HDFC has announced a floating interest rate of 10.25% for loans up to Rs 20 11.25% lakh and for loans above Rs 20 lakh.

The National Housing Bank (NHB), which offers refinance support to HFCs, has introduced a special Rs 4,000-crore refinance facility at 8% annual rate. It has also announced a Rs 2,000 crore refinance support for loans against rural housing projects.

“As we will get refinance from NHB at easy terms, we have decided to pass on the benefit to new customers from January 1,” GICHF managing director M Sivaraman told ET. Industry players, however, believe the NHB facility would be available only against fresh lending. So, the benefit of the soft rates will be limited to fresh loans. GICHF, for instance, will reduce its interest rates for existing customers by 0.25 percentage points.

According to DHFL Vysya Housing Finance managing director R Nambirajan , the company will cut its rates by 0.5 percentage points for existing borrowers across the spectrum. “Besides offering the special refinance scheme, NHB has reduced its normal refinance rates too. Both the moves will help lowering interest rates,” he said.

NHB chairman and managing director S. Sridhar said here on Tuesday: “As we have reduced rates, we also expect HFCs to reduce rates and pass on the benefits to end-customers.”

Source : http://economictimes.indiatimes.com/Housing_finance_cos_to_cut_rates_from_Jan/articleshow/3917356.cms

HDFC Bank reduces floating interest rate on home loans

Home loan borrowers of HDFC Bank may see a reduction in their EMIs as the bank has reduced floating home loan rates by 50 basis points.

Not only will the existing borrowers avail this benefit but also the new borrowers of up to Rs 20 lakh will get a reduced interest rate by as much as 150 basis points. On the other hand, existing borrowers with loans up to Rs 20 lakh and new as well as old borrowers of loans above Rs 20 lakh will be charged 50 basis points lower than the old rates.

The reduced interest rate will translate an individual’s EMI by a only nominal amount. For a loan of Rs 20 lakh with 20 years of repayment period, EMI would come down by Rs 680. Similarly EMI for loans with same amount and tenure of 15 years and 10 years will be reduced by Rs 660 and Rs 600 respectively.

The move is likely to benefit about 90% of the bank’s retail customers which count to nearly 9 lakh borrowers. The bank official suggest that prospective buyers should opt for a floating rate home loan as there are expectations of further dip in the rates. MD and VC of HDFC, Keki Mistry said, “Earlier this week, we raised medium-term funds at an annualised rate of 9.5-9.6%. If there is a further reduction in the cost of funds, we will pass that on to our borrowers.” Fixed rate home loan of the bank stand unchanged at the original position.

The high value loans of the bank that are termed to be above Rs 20 lakh will be offered at 11.25% against 10.25% rate charged for loans below Rs 20 lakh.

Source : http://www.rupeetimes.com/news/home_loans/hdfc_bank_reduces_floating_interest_rate_on_home_loans_1973.html

Reduced interest rates brings little joy

MOHALI: The Indian Banks’ Association (IBA) decision to reduce interest rates on home loan will breathe new life into Tricity’s housing sector that  has been witnessing a scary slowdown. With supply surpassing demand, developers were finding it difficult to find customers who shied away in a scenario where loan rates were high despite the global meltdown.

As news spread, builders who had invested several hundred crores in various housing projects heaved a sigh of relief, expecting people to be motivated to apply for home loans, especially with the new package being too tempting and valid up to June 30 next year.

On Monday, IBA announced that banks would charge an interest rate of 8.5% for home loans up to Rs 5 lakh, while a loan amount of Rs 5-20 lakhs would attract an interest of 9.25%. The decision, as of now applicable to public sector banks, brings forth a new package where the processing fee and pre-payment charge on loans up to Rs 5 lakh have been scrapped, with free insurance up to Rs 20 lakhs.

“Sale of medium range flats will certainly shoot up in the coming days. But like public sector banks, private ones, too, should reduce interest rates,” said Vijay Arora, president, Peermuchalla Builders Association.

With any effort at lifting spirits these days being welcomed with open arms, those in the construction business were happy despite the fact that the development would only partially help overcoming the current slump. “Sales of flats pegged at Rs 30-35 lakh are expected to pick up,” said Amit Mittal, a builder coming up with his housing project in Zirakpur, but quickly added, “high-end houses will not be able to witness a boon until banks decide to reduce the overall rate of interest.”

Source : http://timesofindia.indiatimes.com/Chandigarh/Reduced_interest_rates_brings_little_joy/articleshow/3842665.cms

PSU banks cut rates on home loans up to Rs 20 lakh

Major real estate players today gave a thumbs down to the announcement by public sector banks to cap interest rates at different slabs of housing loan, saying it was not enough, though they felt the step could spur demand in smaller towns.

“Rate of interests are still very high… There will not be many takers,” said DLF Group Executive Director Rajeev Talwar, adding that the rate of interest should have been around 7-8%.

“This package will give a miss to super metros, metros and Tier-I cities, which are the major segments for demand drivers,” they said.

Public sector banks today announced that home loans up to Rs 5 lakh would be given at a maximum interest rate of 8.5%, while those between Rs 5 lakh and Rs 20 lakh would be offered at 9.25%.

Parasvnath Developers Chairman Pradeep Jain said: “The disappointing part is the rate of interest. We were expecting a much higher cut in the rate of interest.”

However, he said low margin money and charging of no processing fee were welcome steps. “For loans over Rs 5 lakh, we were expecting 6% and between Rs 5 lakh and Rs 20 lakh we were expecting 7.5%,” he said, adding, “overall it will give a partial push to the real estate sector, particularly in the affordable housing segment.”

Airing similar views, Omaxe CMD Rohtas Goel said: “We were expecting more sops from banks for the housing sector… for loans up to 50 lakh, interest rates should have been 9% and and for Rs 5 lakh, 5%.”

Unitech Managing Director Sanjay Chandra, however, hailed the package as an “excellent thing” that would boost the realty sector.

Source :  http://www.business-standard.com/india/news/psu-banks-cut-rateshome-loansto-rs-20-lakh/13/24/51198/on

Banks ready with rate relief for home buyers

Banks are keen to offer home loans at an interest rate of 9.25-9.75 per cent for amounts ranging from Rs 5 lakh to Rs 20 lakh.

For loans up to Rs 5 lakh, interest may be as low as 8.25-8.75 per cent, officials said. These rock bottom rates — up to Rs 20 lakh — are for loans till five years.

In the 5-15 year bracket, the rates are likely to be higher by 50 basis points, while over a longer period they will be more by at least 100 basis points.

The Indian Bankers’ Association, which had held discussions with finance ministry officials, will meet in Mumbai this week to finalise the package.

At present, the State Bank of India charges between 9.75 per cent and 10.25 per cent for loan up to Rs 30 lakh of varying tenures. While the lowest rate of 9.75 per cent is for five years, it is 10 per cent for 5-15 years. Beyond 15 years, it is 10.25 per cent.

The Reserve Bank of India wants banks to treat loans of up to Rs 20 lakh as priority sector lending. According to current norms, banks have to lend up to 40 per cent of their total advances to the priority sector, which includes small and medium enterprises, and farms.

The move to include housing in the priority sector will give banks greater leeway in offering attractive home loans.

With deposit rates still in the range of 9-11 per cent, bankers say a drastic fall in lending rates was not possible. Banks will require an interest subsidy to price home loans of up to Rs 5 lakh at rates below 8.25 per cent, officials said.

Bankers have placed the demand for some form of interest support before the finance ministry.

However, both bankers and the ministry seem to have agreed on not compromising on the prudential norms for lending, apart from some concessions on margin money.

“The government and the IBA both feel that any compromise on prudential norms can invite a sub-prime crisis to our shore. We will certainly not risk that,” said the director of a state-run bank.

Realtors, however, want cheaper rates for loans up to Rs 30 lakh. This is because in the metros, loans are usually more than Rs 20 lakh.

Rattled by the slowdown in the economy in the wake of the global financial crisis, the government has targeted housing for relief to lift sentiment.

Last week, while announcing a Rs 20,000-crore growth package for the economy, the government had pledged housing sops.

The board of Reserve Bank of India on Thursday at a meeting in Calcutta had announced a line of credit of Rs 40,000 crore for the National Housing Bank.

Source : http://www.telegraphindia.com/1081215/jsp/business/story_10253331.jsp

Global slowdown casts a shadow on sale of flats in Bangalore

Bangalore: Real estate development in Bangalore and some of the other important cities of the State such as Mangalore, Mysore and Hubli-Dharwad has been severely hit with hardly any buyers for apartments. The global meltdown is said to be having a disastrous effect on real estate business in Bangalore, one of the fastest growing cities.

Housing here has now entered the buyer’s market, in contrast to what prevailed during the boom period when people desirous of shelter were at the mercy of sellers. Apartment prices, particularly on the outskirts of Bangalore, have taken a major beating given the fact that discounts, freebies and even a special interest rates for housing loans (with a certain per cent of the interest paid by the seller) are not bringing in customers.

Sources in the housing sector told The Hindu that “indications showed that the people now feel that real estate prices have touched realistic levels, given the response to advertisements for apartments over the past fortnight”. It is another matter that the discounts being offered on the outskirts of the city, ranging between 15 to 35 per cent, based on the location of the property and the amenities provided therein, have not produced the desired responses. People are now in a “wait and watch” mode with the hope that the real estate market takes a further dip and they can step in at that time.

Crisis

There are nearly 10 major and about 100 small apartment builders in Bangalore, with very few of them extending their operations to tier-two cities. Apartments are in demand only in Bangalore as independent houses are not very expensive in tier-two cities. Most builders are facing a crisis with hardly any buyers for apartments. This has had a cascading effect on material suppliers to the building sector, with builders unable to clear their dues. Some of them have gone back to the old system of bartering their flats to settle dues of suppliers.

The apartment price band about a year ago was between Rs. 2,500 and Rs. 12,000 a sq.ft. The maximum hit is in the luxury segment — between Rs. 5,000 and Rs. 12,000 — although apartment builders in the core areas of the city such as Sadashivanagar , Malleshwaram, Cantonment areas, Koramangala and Indiranagar are still holding on to their price tags. The supply here is less than the demand and consequently builders have been dictating prices, more so, with the land values being very high in these pockets. However, apartments on the outskirts of the city — Hosur Road and all areas adjoining Electronics City, Sarjapur Road, Whitefield , Marathahalli, Yelahanka, Hebbal and Kengeri have been affected with the supply being higher than the demand. While flats in the core areas of the city are purchased for immediate occupation, those on the outskirts are normally termed as speculative investments.

According to Raj Menda, president, Confederation of Real Estate Developer’s Association of India (CREDAI), Karnataka, the property market in Bangalore is now stabilising. He said: “The Central Government has also helped provide cheaper loans and has de-freezed loan sanctions, which will rapidly increase sales. However, a more proactive approach by housing finance institutions and commercial banks will help in completing projects. CREDAI, Karnataka, has requested the State Government to reduce stamp duties, VAT and municipal taxes, which if approved, will also reduce the burden on purchasers”.

Nearly 50,000 apartments are under construction in Bangalore, of which around 50 per cent were booked when the projects started. No new projects are expected to be implemented until the market stabilises. The focus of builders now is on completing the projects.

Source : http://www.hindu.com/2008/12/15/stories/2008121555200100.htm

Home loans to be locked in at 9.5% for first 5 years

Housing is one of the key areas on which the government is focusing to lift economic growth that’s slowing from an average annual pace of 8.9% in the past four years

Mumbai: Public sector banks (PSBs) are set to offer home loans of up to Rs20 lakh at a concessional rate of 9.5% for a period of five years as part of the government’s fiscal stimulus package announced on Sunday to spur spending and bolster sagging economic growth.
All new home loans advanced by state-owned banks until 30 June will come at the 9.5% rate, which will be reset five years later depending on the prevailing trend, according to two senior bankers involved in devising the package who didn’t want to be named.
A formal announcement of the scheme will be made soon by public sector banks. Two officials at two different ministries, who also didn’t want to be named, confirmed the plan.
Housing is one of the key areas on which the government is focusing to lift economic growth that’s slowing from an average annual pace of 8.9% in the past four years. Lower interest rates prop up the demand for homes, which in turn, creates demand for steel and cement and generates jobs in the construction sector.
Banks and housing finance firms are now charging between 12% and 14% for fixed-rate home loans and offering floating-rate mortgages at between 9.5% and 11.75%.

Because the cost of funds for banks currently is higher than the rate at which they will offer loans under the new scheme, the government may work out an arrangement to compensate the lenders, analysts say.

It is not clear what will be the nature of the arrangement but “certainly not subvention”, said one banker. The government offers 3% subvention—or interest subsidy—on small agricultural loans, which are given at a concessional rate of 7%.
The Reserve Bank of India’s (RBI) decision on Saturday to include home loans of up to Rs20 lakh in so-called priority sector lending—targeted at segments such as agriculture, small industry and education—will come in handy for banks to offer mortgages at a concessional rate.

Under banking industry guidelines, 40% of advances are meant to be channelled to the priority sector. Banks that are not able to meet the target are required to park the shortfall with the National Bank for Agriculture and Rural Development at a low interest rate. The money is used for rural infrastructure projects. Analysts say the five-year fixed rate of 9.5% will dent banks’ profitability if the government doesn’t offer a support plan for lenders in case interest rates remain at this level or rise further. But if interest rates drop, consumers will lose out on the benefit of falling rates.
“If interest rates fall and home loan rates come down below 9.5%, we will have to watch what exit options this package would provide. Many questions of potential borrowers might have to be answered before they go ahead and avail of such loans,” said Ravi Sankar, a banking analyst at Antique Stock Broking Ltd, a Mumbai-based brokerage.
The asset quality of banks might be compromised if they try to push the scheme aggressively, Sankar said.
“This rate is quite attractive for borrowers at the moment,” said Hatim Brochwala, an analyst at Khandwala Securities Ltd, another domestic brokerage. “However, if interest rates fall and home loan rates become cheaper, borrowers might start complaining. So, the banks will have to chalk out an exit plan. Converting fixed rate into floating rate (loans) may not be a good option as the penalty is heavy.”
Analysts are betting that interest rates will come down by 300 basis points in two years and home loan rates will be cheaper than 9.5%. One basis point is one-hundredth of a percentage point.
On Saturday, the RBI announced a special refinancing package of Rs4,000 crore to the National Housing Bank, which regulates housing finance firms, to help prop up the home loan market. Analysts say the refinancing facility is too small.
Housing Development Finance Corp. Ltd (HDFC), India’s oldest mortgage firm, has a disbursal target of about Rs45,000 crore this year. While HDFC accounts for at least 40% of the housing loan market, public sector banks make up about 20%, limiting the scope of the stimulus package, analysts say. ICICI Bank Ltd, India’s largest private sector bank, is a prominent lender in the mortgage market.

Source : http://www.livemint.com/2008/12/08234217/Home-loans-to-be-locked-in-at.html