Banks likely to continue same home loan interest rate

THE RESERVE Bank of India has walked out from its year-long accommodative monetary policy but the leading public and private sector banks still want to continue their cheap home loan schemes.

India’s largest lender the State Bank of India is looking forward to continuing its special home loan scheme after 7 November, when the bank is supposed to call it back. However, the bank has not announced the extension of the tenure of the scheme. The bank is providing home loan at an interest rate of 8%, from Rs. 5 lakhs onwards.

On the other hand, the Punjab National Bank has declared that they are stretching their Festival Bonanza Offer-2009 for housing and car loans till 31 December this year. The bank is providing home loans up to Rs. 30 lakhs at an interest rate of 8.5% for the first three years and at 2 to 2.5% below BPLR in subsequent years of loan tenure under the floating option.

The third largest private lender of the country, Axis Bank is aggressively promoting its home loan segment. The bank is providing home loan at an interest rate of 8% for the first year, whereas from the second year onwards, the loans will be carrying a floating interest rates that is entirely dependent on the bank’s mortgage reference rate.

Axis bank is also organizing ‘Home for All’ expos in major cities, following its huge success last year and will be providing on-spot approval along with waiving loan processing fees for prospective buyers. The first of this fair will be held in Bengaluru from 6 November, 2009.

source:http://www.merinews.com/article/banks-likely-to-continue-same-home-loan-interest-rate/15787700.shtml

Home loan rates to harden as banks feel crunch news

The days of cheap home loans are drawing to a close as the Reserve Bank of India prepares to harden its key policy rates. Large public sector banks, such as the State Bank of India and Punjab National Bank, are reportedly planning to withdraw the special schemes that offer rates as low as 8 per cent for the initial years.

With the RBI sending out signals of a tighter monetary policy, banks may have to raise their home loan rates by January. Moreover, listed Indian banks may have to shell out more than Rs11,000 crore in the next one year to improve their cover towards non-performing assets to 70 per cent, as mandated by RBI’s recent monetary policy.

“Seeing the hawkish tone in RBI’s quarterly monetary policy review, the bank board thinks it may not be possible to continue with these schemes after the end of the current calendar year,” The Economic Times quoted an unnamed senior official with PNB, the country’s second-largest public sector lender, as saying.

While the special offers will be withdrawn from the end of the current calendar year, most banks are extending the festival offers, such as a zero processing fee, till then.

Currently, various banks are offering teaser rates for the first few years on home loans. Development Credit Bank is offering 7.95 per cent rate for the first year on their home loans. SBI, Dena Bank and Canara Bank are currently offering 8 per cent rate for the first few years.

After the offer period, such loans will be converted into floating rate loans.

Private sector banks, which were forced to offer lower rates after the announcement of special schemes by their state-owned rivals, are likely to hike rates once the public sector banks withdraw such schemes. Considering the fact that floating rate loans comprise a large part of the housing loan segment, any increase in rates will affect a large number of existing loans as well.

http://www.domain-b.com/finance/banks/20091102_home_loan_rates.html

Home prices may hold despite tighter norms

Home prices may not rise sharply despite an increase in provisioning norms on loans to the real estate sector by the central bank, reversing a stimulus measure and seeking to nip the formation of another asset bubble in the bud.

Shares of property companies slumped, with the Bombay Stock Exchange Realty Index, which has risen 78% this year, dropping 6.24% on Tuesday compared with a 2.31% decline in the benchmark equity index, the Sensex.

The Reserve Bank of India (RBI) increased the provisioning for real estate loans to 1% from the earlier 0.4% at its quarterly monetary policy announcement on Tuesday. In November, RBI had reduced the provisioning requirement to 0.4% from 1% to boost the real estate sector, which saw residential sales fall as much as 50% during the downturn amid the global financial crisis.

In April-May, this year, the sector started to see an improvement in sales as developers launched homes in the affordable Rs15-30 lakh range and interest rates on home loans came down.

In the last quarter, however, due to the improved sales, developers in Mumbai and Delhi suburb Gurgaon increased home prices by 5-15%, signalling that the price drop seen during the slowdown was over.

“There is no asset bubble in the making but the market has turned around so significantly that the RBI is saying that last year we reduced provisioning norms in the interest of developers, so now that they are pricing products high, why should we give them leverage,” said Shobhit Agarwal, joint managing director, capital markets, Jones Lang LaSalle Meghraj.

Developers say that while the tighter provisioning norms will impact margins, they will hold prices.

DLF Ltd, India’s largest developer by market value, said the changed provisioning norms will not lead to an increase in the prices of homes, though an increase in the risk weightage for real estate will send out a negative signal to the sector.

“This is perhaps not required so early in the economic revival process,” said Rajiv Talwar, group executive director, DLF.

Agarwal agrees that the impact on the sector will not be significant. “This policy will impact developers, which we have seen in the way realty stocks have gone down, and not so much home prices,” he said. “There might be some developers who may want to increase home prices but the increase in provisioning is not so significant that home prices will shoot up.”

Not everyone is so sure. According to Mumbai-based Housing Development and Infrastructure Ltd (HDIL), the third largest developer by market value, home prices may increase depending on the liquidity levels of companies.

“The new provisioning norm will make lending more expensive for developers, squeezing their profitability, and so those in need of cash flow may pass it on to buyers, leading to a rise in prices,” said Hari Pandey, vice-president, finance and investor relations, HDIL.

HDIL has in the past one year borrowed Rs400 crore from banks, at an average lending cost of 12%. The company has repaid about Rs200 crore to banks in the same period. DLF shares fell 6.4% to Rs401.70 each at the close on Tuesday, Unitech Ltd fell 7.71% to Rs85.60, HDIL fell 8.8% to Rs339.45 and Parsvnath Developers Ltd fell 7.61% to Rs114.20.

RBI’s signals favouring a tighter monetary policy could have a knock-on effect.

“Interest rates may also go up, and then the cost of lending will move up and developers will be affected,” said Pandey. That may not happen until the end of the fiscal, according to banks.

“I do not see any change in the interest rates till March. There is no liquidity problem in the system and credit offtake is less than expected,” Corporation Bank executive director Asit Pal told PTI.

M.V. Nair, chairman and managing director, Union Bank of India, told Reuters that he doesn’t expect rates to change in the near future. “There is a concern of low demand from industries,” Nair was cited as saying. “We expect demand to pick up from the second half of the (fiscal) year. The cost of funding for banks is coming down and lending rates have also come down over time.”

M.D. Mallya, chairman and managing director, Bank of Baroda, agreed with his colleague. “I don’t see any change in rates at this point of time. I think stable rates will prevail for the time.” Home prices are largely dependent on the demand-supply situation in the sector and the RBI measure will not affect them, said Pujit Aggarwal, managing director of Orbit Corp. Ltd, a Mumbai-based real estate firm.

“Considering that bank loans to the real estate sector are already expensive, at a premium of 150-300 basis points, it is likely that banks themselves will absorb this cost,” he said. Orbit’s consolidated debt (from bank borrowings) is about Rs450-470 crore.

Developers such as the Bangalore-based Ozone Group also said that new projects that have not tied up funds for construction finance and have not received a commitment from banks are the ones that will be directly affected.

“Just when the sector was heading for a complete turnaround, this comes as a setback to the overall sentiment,” said K.S. Sudarshan, chief executive of Ozone Group. “It has to be seen how banks react to this change and shoulder it themselves or changes interest rates.”

Source:http://www.livemint.com/2009/10/28001128/Home-prices-may-hold-despite-t.html?h=B

Banks Combat With Each Other To Attract Buyers For Luxury Home Loans Segment

With banks elbowing each other out to have premium customers in their fold, borrowing more than Rs 50 lakh to buy a high-end home has become a breeze. Standard Chartered Bank has joined a couple of others in offering enticing interest rates on home loans above Rs 50 lakh. State Bank of India (SBI), with its 8 per cent fixed rate for the first year offer, has been able to draw a good number of premium customers for home loans as it seeks to get the rich to bank. On the other hand, Development Credit Bank (DCB) has the lowest offer among all lenders. In the first year, the bank charges 7.95 per cent for loans up to Rs 5 crore and the existing floating rate from the second year onwards.

Source : Financial Chronicle

Home loan processing just got tougher

The emergence of “affordable” housing has revived the real estate market, but for prospective buyers, getting a home loan
approval has just got a little more difficult.

For one, banks, wiser from the meltdown, are rechecking the installment-to- income ratios (the figure that determines the EMI). Earlier, banks extended EMI (equated monthly installment) on the loan up to 50% of the monthly salary. Now, this installment to-income ratio stands between 30% and 50%. “It’s not advisable to have a single number,’’ says Renu Sud Karnad, joint managing director, HDFC.

Moreover, many banks are taking into account only the recurring income of the potential buyer to compute the monthly EMI. “Banks are no longer looking benevolently at other sources of income, such as performance bonus and variable pay, while computing the installment-to-income ratio,’’ says Praveen Kutty, executive vice-president and head (retail banking), Development Credit Bank. “Our focus is on income sources that are consistent while arriving at the ratio ,’’ says Karnad.

Kotak Mahindra Bank takes into consideration only the monthly income to calculate the EMI. “We don’t look at other incomes such as bonus because it may not be there every year,’’ says Kamlesh Rao, executive vice-president, Kotak Mahindra Bank.

Some banks are assigning sector wise installment-to-income ratios so that there is consistency in loan disbursals. Such ratios are determined on the performance and the credit rating of the industry.

Analysts say banks are taking the cautious route to improve their risk management. “Some time back, capital was hard to come by. Banks did not want to set aside huge amounts towards lending because if delinquencies arose, they would have had to make provisions for those,’’ says Clyton Fernandes of AnandRathi Financial Services, a Mumbai-based securities firm.

Even when it comes to documentation, banks are more stringent before disbursing home loans. Apart from the pre-requisite documents like IT returns of three years, PAN card copy and bank statements of the last six months, banks are also scrutinising details such as passbook entries to check withdrawal patterns.

“Banks like us are actively tapping the Cibil (Credit Information Bureau) list to check among other things the credit card payment history of borrowers. Such checking
is now integral to the credit buying process,’’ says Rao.

In the case of professionals who have shifted from their hometown, banks are asking for title deeds of house in the native place even if it is registered in the name of the parents, to determine the repayment capacity of the executive.

Source:http://economictimes.indiatimes.com/personal-finance/loan-centre/home-loans/home-loans-news/Home-loan-processing-just-got-tougher/articleshow/5155667.cms

RBI moves to make loans transparent

If you have a home loan at floating rates, its a fair bet you have had the frustration of reading about banks reducing their rates only to find it makes no difference to you. However, when rates were revised upwards, you could be sure the interest on your loan would mount too.

There is now the first clear sign of the RBI trying to do something about this, by proposing a base rate which would be the sum total of various cost elements for banks.

Today, banks fix floating rates at a discount to benchmark prime lending rate. When rates are cut, the discount is increased, giving new customers a lower rate, but the BPLR is usually left untouched . So, existing customers whose discount rate is already contractually fixed dont benefit. When rates are hiked, banks typically leave the discount unchanged and move the BPLR up, ensuring all customers pay a higher rate.

source:http://mail.google.com/mail/?shva=1#inbox/12479fe4db6da1ac

Banks Compete to Attract Customers for Premium Category Home Loan

Borrowing more than Rs 50 lakh to buy a high-end home has become a breeze, with banks elbowing each other out to have premium customers in their fold. Standard Chartered Bank, a major foreign bank in India, has joined a couple of others in offering very attractive interest rates on home loans above Rs 50 lakh. “Our focus is on the premium category and hence we underwrite home loans only above Rs 50 lakh,” Shyam Srinivasan, head of consumer banking at Standard Chartered Bank, told Financial Chronicle. Standard Chartered is the only foreign bank operating in India that is offering home loans at such attractive interest rates.

State Bank of India (SBI), the country’s largest bank, with its 8 per cent fixed rate for the first year offer has been able to attract a good number of premium customers for home loans as it seeks to get the rich to bank with it for services ranging from regular banking to wealth management. Standard Chartered is charging a low floating interest rate of 8.2 per cent, against SBI’s 8 per cent for the first year, 9.5 per cent for the next two years and thereafter, the prevailing rate.

With the onset of the festival season, many people think about buying their dream home. Buying a premium property in metros such as Mumbai means spending more than half a crore. Public sector lender SBI is trying to garner as much market share as possible with their special home loan scheme. “The 8 per cent interest rate has found favour among first-time home buyers because people want to make the most of the low interest rate regime,” said a senior SBI official, who did not want to be named. According to him, more than 20 per cent of the home loan customers avail of loans more than Rs 50 lakh.

Development Credit Bank (DCB) has the lowest offer among all lenders. In the first year, DCB charges 7.95 per cent for loans up to Rs 5 crore and the prevailing floating rate from the second year onwards. According to several home loan advisers, interest rates should not be the only criteria for taking out a home loan and one should also look at the processing fee and foreclosure charges that the bank levies. Private sector banks such as HDFC and ICICI Bank are offering home loans above Rs 50 lakh at lower interest rates but these lenders also charge hefty processing fees and have hiked foreclosure charges also. Most of the banks charge loan processing fees, which are not refundable, ranging from 0.5 per cent to 1 per cent of the loan account. A customer can, however, based on their credit history, bargain on these charges and get a better deal.

Source : http://www.indianrealtynews.com/home-loans/banks-compete-to-attract-customers-for-premium-category-home-loan.html

SBI begins selective repricing of loans

After slashing term deposit rates aggressively, State Bank of India (SBI), the country’s largest lender, has begun raising interest rates on corporate loans by up to 50 basis points.

The move is part of the bank’s strategy to ensure that its net interest margin (NIM) – which is the difference between the cost of funds and the interest earned – improves over the next few months.

The bank, which saw its NIM drop to 2.30 per cent by June-end, is trying to go back to the 3 per cent comfort zone. Bank executives, however, said that the lender was likely to end the current financial year with an NIM of 2.55-2.6 per cent.

The bank which mopped up over Rs 1,000 crore-a-day at the peak of the financial crisis last year, has lowered deposit rates on half-a-dozen occasions during the current financial year. For retail deposits of up to Rs 1 crore, the peak term deposit rate has been lowered by 300 basis points to 7.5 per cent over the last 12 months, while it brought down the prime lending rate by 200 basis points to 11.75 per cent.

While the cost of funds would take time to reflect the changes, this period, marked by a sharp slowdown in credit demand, has affected SBI’s interest income.

The impact of a cut in lending rates on interest income was immediate, but the benefit of slashing deposit rates will be gradual. Bank executives said, the subdued NIM was also a reflection of the decline in the credit-deposit (C-D) ratio.

The high margin in September 2008 was possible when the C-D ratio was 71-72 per cent. The ratio has now dipped to 67 per cent due to a slowdown in credit offtake, a fallout of the global financial crisis. “Nothing drastic can be done on the interest income side in the short run,” said a senior SBI executive.

While the credit off-take remains subdued, the bank has been able to rework rates offered to large companies and mid-size companies in the second quarter. “We have been able to increase lending rates by up to about 50 basis points, especially for those companies that have come up for repricing,” an executive said. The reset clause in loan agreements was being used to reset interest rates.

They said the move should help push up margins marginally. As credit offtake gathers momentum in third and fourth quarters, the rate charged on fresh credit could be higher and that should boost margins.

On the deposit side too, the headroom available was limited. Once credit demand picked up, liquidity in the system was expected to come down. In addition, the Reserve Bank of India would also initiate measures as part of its strategy to shift to a tighter monetary policy regime. Further, SBI and other banks would have to raise rates to counter competition from other asset classes as the stock market sentiments have improved.

But SBI executives said that even if they had to raise rates for retail depositors, the bank’s move to offer high rates last year was helping them lower their dependence on high-cost bulk deposits.

As a step towards reducing dependence on bulk deposits, the bank floated a 1,000-day deposit scheme in October 2008, offering 10.5 per cent interest rate aimed to garner retail resources. The scheme has been withdrawn now

Source : http://www.business-standard.com/india/storypage.php?autono=372407

Banks sweeten home loans with festival offers

MUMBAI: In an attempt to shore up credit demand, banks are rolling out festival schemes on home loans ahead of Diwali. Deals include teaser rates  for initial years, with some lenders giving an option to shift to either fixed or floating rates in subsequent years.

Lenders like Canara Bank, Bank of Maharashtra (BoM) and Dena Bank are offering fixed-rate loans for the first five years, and subsequently, linking the loans to their prime lending rates. While others like Bank of India are offering fixed-rate loans for the first two years. India’s largest bank SBI is offering fixed rates for the first three years. The competition to gain market share has resulted in a small price war.

On Thursday, Development Bank of Credit introduced a fixed rate of 7.95% for the first year — the lowest, at least, for the first year. From the second year onwards, the home rates will be linked to floating rate loans. BoM and Dena Bank offer a fixed rate of 8% for loans up to Rs 30 lakh in the first two years, while Canara Bank offers 8% in the first year for Rs 30 lakh and SBI offers 8% for the first five years for loans up to Rs 5 lakh.

Most banks have also waived off the processing fee during the festival season. Traditionally, home sales peak ahead of the academic year in June, with families looking out for new homes during summer vacations. However, this year’s summer sales were flat due to uncertainties. Now, builders and lenders are making a fresh pitch to push sales during Diwali through limited period offers. Interestingly, the offers are coming largely from PSU banks. HDFC, ICICI Bank and LIC Housing have not yet announced any festival offers, but announcements closer to Diwali are not ruled out either. The three lenders charge interest at 8.75% on their lower-end loans.

Bank officials are hopeful that the retail credit growth will contribute substantially for the credit demand in the third quarter of this fiscal year. Most offers are till December 31, 2009. “The demand for home loans is better than the past years. But at the same time, we are seeing many applications which are transfer cases (from another bank),” said AC Mahajan, chairman and managing director of Canara Bank.

Banks like SBI, Canara Bank, BoM, BoI and Dena Bank are offering fixed-rate loans for the initial years. However, banks like BoB and PNB are offering fixed rates, besides giving floating rate loans.

“The demand for auto loans continues to be higher than home loans. But at the same time, we are witnessing better demand in the past few weeks in small- and mid-sized towns,” pointed out M Narandran, ED of BoI.

Source : http://economictimes.indiatimes.com/personal-finance/loan-centre/home-loans/home-loans-news/Banks-sweeten-home-loans-with-festival-offers/articleshow/5088346.cms

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

General Insurance Corp offers home loans under spl scheme at 7.95%

MUMBAI: The housing finance outfit of General Insurance Corporation of India (GIC) has introduced a limited period special scheme for the festival  season starting from October 1, for all new individual housing loans up to Rs 1-crore.

Priod of six months and thereafter reset to the then preree accidental death insurance cover and free property insurance cover would applicants.

The company has also introduced a unique life insurance com in tie-up with Kotak Mahindra Old Mutual Life Insurance Ltd., where a credi account holder against death due to any cause including accidental death.

ponse, the company said, adding that the borrower opting for this scheme can ale premium component from GICHFL.

In addition to the above scheme funched a loan scheme carrying interest at 8.95 per cent per annum fixed for year.

Source : http://economictimes.indiatimes.com/personal-finance/loan-centre/home-loans/home-loans-news/General-Insurance-Corp-offers-home-loans-under-spl-scheme-at-795/articleshow/5069200.cms

Greater transparency for home loan seekers

The Banking codes and Standards board of India (BCSBI) has asked its member banks to justify their lending policies and other services thus ensuring more transparency in the way banks price their home loans.

BCSBI was formed by RBI in November 2003, under the chairmanship of the then deputy governor, S.S. Tarapore, to address issues concerning availability of adequate banking services to common man.

According to the directions by the BCSBI, the banks will have to inform the customers, who avail home loans at floating rates, of the reference rate to which the floating rate is attached.

KJ Udeshi, chairperson of the BCSBI, said that the banks would have to disclose changes in such reference rates on their websites.

These codes will be applicable to all major commercial banks in India. Banks have been asked by RBI to voluntarily accept the codes, which entails the banks to justify their pricing mechanisms. They will have to abide by the publicly announced policies, failing which the Board could intervene and ensure that the banks comply with the announced policies.

RBI’s deputy governor, KC Chakrabarty said that as a regulator, they had the onus of the customers. He added that the new norms will aid the vulnerable sections of the society as they do not have any another platform for redressal.

The new code urges the banks to explain Income Tax Act provisions applicable to interest income. Bank will have to dispose off customer complaints within 30 days. Besides this, banks will have to come out with the most important terms and conditions (MITC) for credit cards and loans that are concise and comprehensive.

Customers can now check with the banks’ websites for policies relating to cheque collection, compensation, collection of dues and grievance redressal.

BCSBI, in association with Reserve Bank and Indian Banks’ Association (IBA), had first issued the code in 2006.

In order to enhance the credit delivery mechanism in the industry, BCSBI plans to set up a credit counselling centre in Mumbai from next month.

The service will be free of cost for member banks’ customers.

Source : http://www.rupeetimes.com/news/home_loans/greater_transparency_for_home_loan_seekers_2789.html

Banks Attempt to Make the Best of Festive Season by Lending More for Home Purchase

State Bank of India, Deutsche Postbank, ING Vysya Bank and Punjab & Sind Bank are attempting to light up the festival season by lending more for home purchases than they did six months back, thanks to availability of funds and rising trust in the borrower. But individuals are still not buying as high home prices keep them away from their dreams. “The economy has improved and the liquidity situation is much better and interest rates have eased off considerably,’’ Anoop Pabby, joint managing director at Deutsche Postbank Home Finance, told SundayET. “It is only natural then that the home buyers expect the reduced risks to result in reduction in interest rates and relaxation of margin money norms.” The housing finance company is now funding up to 80% of the property value to most salaried people and in a few cases up to 85%, depending on the credit worthiness of the borrower. This is more than the 70% it used to lend a few months back.

Indian mortgage lenders, who were funding as much as the full value of the property in some cases, tightened lending standards after the collapse of Lehman Brothers last year this month because of the liquidity crisis and a rise in defaults due to job losses. But the scene has improved since with the Reserve Bank of India cutting lending rates to record lows and pumping in unprecedented amount of money into the system. Lenders such as ING Vysya Bank, and Punjab & Sind Bank have reduced the margin money requirement to 15-20% from 25-30% towards the cost of the house on their home loans — as they try to tap the potential home buyers. This leads to a borrower paying investing lesser capital than before. So on a home loan of Rs 25 lakh, a customer would need to pay only Rs 3.75 lakh now against Rs 6.25 lakh demanded earlier, where the margin norm is relaxed to 15% from 25%.

State Bank of India, which has cut the margin requirement to 20% from 25%, may reduce it a further 5%. “Festive season is a time when consumers traditionally contemplate property investments. Keeping in mind this, we have relaxed the margin money requirements,” said Sonalee Panda, product & marketing head at ING Vysya Bank. As part of its initiative to draw potential customers, the bank is participating in various property melas and community events, apart from running a special offer on home loan balance transfer product. The interest rates are also in favour of buyers now as it may start rising again in a few months. The rates have fallen to about 8% from as high as 13% in early 2008.

“Interest rates are likely to harden over the next six months with the credit offtake improving and inflation moving into the positive territory,” said G S Vedi, the newly-appointed chairman & managing director of Punjab & Sind Bank. “This is the best time for a potential buyer to go home shopping.” But the easy financing is not luring prospective buyers as price seems to be a bigger deterrent than the availability of loans. “This will be one of the last factors driving my purchase,’’ said Arpit Agarwal, an employee of a multinational company in Gurgaon, near New Delhi, who has been looking to buy a home with three bed rooms, a hall, and a kitchen. “I have been looking for a property for last six months, the prices are still not affordable.

Prices need to further come down to the liking of the middle class. Even then there are not many properties available in the secondary market, and if there are, they are quoting at exorbitant prices.’’ With buyers reluctant to jump in at the bank’s lucrative funding offers, it may be a bit longer before the real estate demand returns to its past glory. Robin Roy, associate director at PricewaterhouseCoopers (PwC), however, is not so optimistic about the home loan market. He believes since these are specific period offers, this may not see a huge surge, as prices of properties have not come down as per expectations. That is probably why the biggest mortgage company, Housing Development Finance Corp and IDBI Bank have not joined the chorus of lower down payment.

HDFC continues to ask for a contribution of 15% towards the cost of property upfront. “We have always been doing lending based on income and not on asset value,” a HDFC spokesperson said, adding that there won’t be any further rest in this norm. Public sector lender, IDBI Bank, however, is encouraging borrowers to make higher down payment and offers loans 25-50 basis points lower. “Green shoots still need a little protection. We have gone up to 80% (financing), but we believe for us to be liberal there has to be a downward trend visible in terms of bad loans,” CS Jain, head of personal banking, IDBI Bank said.

Source : http://www.indianrealtynews.com/home-loans/banks-attempt-to-make-the-best-of-festive-season-by-lending-more-for-home-purchase.html

The truth about pre-approved loans

Last week I got a call from my bank informing me that I have been pre approved a personal loan for Rs 200,000! What?! Only recently I had successfully paid off a personal loan for 2 years!

And this pre-approved loan will be at a lower rate of interest and will be disbursed within the next 48 hours. And all I required was resubmit some documents. Perfect and simple! Or is it?

I am sure I am not alone here. Most of us out there at some point had similar calls from your banks! But should we jump when such an offer is made to us? Or is there anything else that we need to check before taking it up? I decided to find out. I rang up my financial consultant and he said that there are several points to be considered before taking up a pre-approved loan.

What is a pre-approved loan, eligibility and types of pre approved loans

A pre approved personal/home/car loan is usually offered by banks to people who have a clean track record of loan repayment history, like in my case. You get it even if you had pre closed your earlier loan amount.

Some banks pre-approve a loan to its own customers even if they had not taken a loan at all based on certain conditions like the cash inflow and transactions in their salary accounts or the repayment track in case of credit card holders. However, in both cases pre approved loan offers often come with a time limit to accept them.

There are two types of pre approved loans: unsecured and secured. Unsecured pre approved loans comprises of mainly personal loans and credit cards while the secured ones are the car loans, and even home loans.

So what you need to know if you get a pre approved loan offer from your bank?

Do you really need it?

First ask yourself if you really need the loan at all. There are times when people take the loan just because it was offered to them when in reality there was no necessity. Avoid a loan if you do not have a really pressing situation ahead of you! Remember, every loan pre approved or not comes with a cost. And at the end of the day it is you who will have to bear it.

Why a pre approved loan is good!

Generally, the time taken for processing of pre approved loans is much less thus reducing the risks of you missing out on the chances of getting that new car or your dream house. In-principle approvals for home loans from banks are a boon to people who have not identified a property yet. This will let the customer know how much the bank will give him and search for a property accordingly.

Decide the right loan amount for you!

If you decide to take up the pre approved loan the next thing to decide the exact loan amount you would need. Usually, the banks decide the pre approved loan amount based on your previous loan repayment records or your account balance, transactions and credit card transactions.

And here you are in a better negotiating position. Having said that it becomes all the more important for you to decide on the loan amount based only on your requirements and not simply for the reason it is being offered to you.

Check the interest rates!

In the case of pre approved loans the interest rates will be slightly lesser than the rate of interest offered to other customers like in my case. My bank offered me an interest rate that was 2 per cent less than what was offered to other customers.

However, this alone does not qualify for taking up the loan. There could be other banks out there that offer the same loan amount for a cheaper 16-18 per cent. So it is important to check the loan offers from other banks before signing on the dotted lines.

It is also important to clarify with the bank about the nature of the interest, particularly for home loans, whether it is fixed or floating.

You would still need the documents anyway!

Often, the conditions for a pre-approved loan are more or less the same for a loan you may approach your bank for. Even for pre approved loans banks might require some documents except in the case of some in house bank customers and require the prior checks in case of home and car loans. Sometimes even a small discrepancy in the documents could be enough reason to cancel the pre approved loan.

So the next time you get a mail from banks about a pre approved loan remember to look for the above details. After all, it is your money!

Source : http://business.rediff.com/report/2009/sep/18/perfin-the-truth-about-pre-approved-loans.htm

Home loan rates dive

For those planning to take a loan to buy their house, there is good news. Several banks have slashed home loan rates recently. Again.

Bank of India has come up with a festive offer called Star Home Loan, which can be availed till December 31. For a loan of up to Rs 50 lakh, the rate of interest will be 8.50 per cent in the first year and 9.25 per cent in the second.

For loans of Rs 5 lakh-1.5 crore, the interest in the first year will be 9.75 per cent and 10.50 in the second. From the third year, the then floating rate of the bank will be applicable in both the cases.

Union Bank of India [ Get Quote ] has launched a special festive offer on home and auto loans. As per the offer, for home loans up to Rs 50 lakh, the bank will charge a fixed rate of 8.50 per cent for the first three years. From the fourth year, the interest will be a floating rate linked to the benchmark prime lending rate of the bank for all tenures. The bank has also reduced rates for car loans by 75-100 bps, depending on the tenure.

Says R.K. Nikra, chief manager, “The offer will be effective from September 1 September till October 31.”

A few days before the UBI offer, ICICI Bank [ Get Quote ] launched a special offer for all new home loans. As per the new offer, the bank will charge an interest rate of 8.75 per cent for loans up to Rs 20 lakh. For loans of Rs 20 lakh-50 lakh, the new interest rate is 9.25 per cent.

Borrowing above Rs 50 lakh will attract 9.75 per cent interest rate. Effective from August 20, the scheme is available only for a limited period of time, said an ICICI spokesperson. Apart from the special offer, ICICI Bank’s home loan interest rates are in the range of 9.25-11 per cent.

Both theses offers came within weeks of the State Bank of India (SBI) cutting rates by 50-75 bps on high-value home loans. Earlier, SBI had launched a new home loan scheme offering 8 per cent for 1-5 years, depending on the amount, with zero processing fees, as against an average of about 10 per cent charged by others.

Among other players who have cut home loan rates are Punjab National Bank [ Get Quote ], housing finance majors LIC Housing Finance [ Get Quote ] and HDFC [ Get Quote ].

Source:http://business.rediff.com/report/2009/sep/15/perfin-home-loan-rates-dive.htm

Punjab & Sind Bank cuts interest rate on new home loans

STATE-RUN lender Punjab & Sind Bank has announced lower interest rates for home and auto loans ahead of the festival season. The new interest rate for new home loans of up to Rs 20 lakh is 8.25% for the first 24 months, 9% for the next 36 months and thereafter it would be minus 2.5% of the prime lending rate, but subject to a minimum of 10%, the bank said in a statement. Earlier, the average interest rate of the bank was priced between 10% and 11%. For new auto loans, the bank has reduced interest rates by 50 basis points for loans up to Rs 10 lakh. The revised rates will be applicable for all fresh home and auto loans with effect from September 21, 2009, onwards and shall remain in force till the end of this calendar year, the statement added. “Where collateral security is available, these loans shall attract still lower rates, starting from 9.75% per annum onwards linked to Bank’s BPLR,” the bank said.

Source:http://lite.epaper.timesofindia.com/getpage.aspx?pageid=10&pagesize=&edid=&edlabel=ETD&mydateHid=16-09-2009&pubname=&edname=&publabel=ET

SIB announces new home loan scheme

Kerala-based South Indian Bank (SIB) has announced a new low-rate housing loan scheme with fixed rate of interest for the first three years.

The scheme, titled ‘SIB Shelter’ with fixed interest rate for the first three years, would provide loans for purchasing ready-built houses or flats or constructing new ones on one’s own land anywhere in India, a SIB release said today.

The interest rates under the scheme would be as low as 8.50 per cent fixed per annum for the first 18 months and 9.50 per cent in the following 18 months, it said.

This competitive package comes complemented with lower interest rate and speed in disposal of housing loan applications from 550 Core Banking System (CBS) branches all over India, it said.

“The SIB Shelter is our festival bonanza to those who wish to realize the cherished dream of owning a home faster,” said Dr V A Joseph, managing director and chief executive officer of the bank.

Source : http://www.business-standard.com/india/news/sib-announces-new-home-loan-scheme/73131/on

Canara Bank cuts home loan rates

As part of the festival offer, the Bangalore-based public sector lender, Canara Bank, has reduced the rate of interest on all fresh home loans from September 10.

The rates have been cut 0.25 per cent.

The new rate of interest on all new home loans upto Rs 30 lakh will be eight per cent for the first 12 months, nine per cent for the next 48 monhts and BPLR 2.50 per cent subject to a minimum of 10 per cent thereafter.

Similar changes have been effected for all new home loans above Rs 30 lakh and upto Rs 1 crore. The revised rate will be 8.75 per cent for the first 12 months, 9.50 per cent for the next four years and BPLR 2 per cent with a minimum of 10.50 per cent thereafter, , a Canara Bank statement said.

The above festival offer will be valid till September 30, 2009, the bank statement said.

source:http://www.business-standard.com/india/storypage.php?autono=369592

Home loan EMIs to cost Rs 10,000 less

Home loan seekers can save up to Rs 10,000 on their monthly repayments for one year as the government today approved one-per cent interest subsidy for houses that cost less than Rs 20 lakh.

Aimed at promoting low-cost housing, the subsidy will be available for loans up to Rs 10 lakh, provided the cost of the dwelling unit does not exceed Rs 20 lakh, Minister of Information and Broadcasting Affairs Ambika Soni said after a meeting of the Cabinet that cleared the proposal of the Finance Ministry.

“It is expected that cut in interest rates should reduce equated monthly instalments (EMIs) of borrowers and create additional demand for housing, particularly in the low cost category,” she said, adding the scheme would cost the exchequer Rs 1,000 crore and benefit about 10 lakh borrowers.

Besides, she added, the move “in turn should stimulate demand in the construction industry as well as industries such as steel and cement having employment and income multiplier effect”.

The Cabinet approved the scheme for providing interest rate subsidy on houses in pursuance to an announcement made by Finance Minister Pranab Mukherjee while replying to the debate on the budget for 2009-10 in July.

Though the scheme would help loan borrowers in small cities, it would not be of much benefit to those looking for houses in metropolises like Delhi, Mumbai and Bangalore as the cost mostly exceed the threshold of Rs 20 lakh.

The subsidy scheme, Soni said, is aimed at arresting deceleration in flow of credit to the housing sector that can be attributed to an increase in the price of houses, slackening of income growth and rise in interest rates.

Besides purchase and construction of new houses, she said, the interest subsidy would be also be provided for extension of an existing house provided the cost does not exceed Rs 20 lakh.

Giving details of the scheme, Soni said the subsidy would be computed for 12 months on disbursed amount and adjusted upfront in the principal outstanding.

The scheme will apply to loans irrespective of whether they are on fixed or floating rate basis, she added.

The RBI and the National Housing Bank (NHB), which have been designated as nodal agencies for implementation the scheme, will have to put up demand before the government for release of the subsidy amount.

Banks and housing finance companies will be required to submit a monthly consolidated return to the RBI and NHB, respectively, specifying the quantum of interest subvention towards housing loans. — PTI

Source : http://www.tribuneindia.com/2009/20090911/biz.htm

Cabinet may discuss 1% subsidy on home loans

New Delhi: In a move to boost the affordable housing sector and support middle income groups, the Union Cabinet on Thursday is expected to approve a proposal for 1% interest subsidy on housing loans upto Rs 10 lakh. At a time when low cost is the buzzword in the real estate sector, the scheme envisages providing 1% subsidy on homes loans upto Rs 10 lakh on houses costing not more than Rs 20 lakh. The subsidy will be paid from the governments kitty.
Finance minister Pranab Mukherjee, in his reply to the discussion on Finance Bill, had announced the interest subsidy scheme. The proposal , which is expected to cost around Rs 1,000 crore, was widely welcomed by realty players and also homeloan companies. The move, however , will mainly boost affordable housing projects in Tier II & III cities. In the metros, cost of houses has spiralled much beyond Rs 20 lakh.

According to sources, the interest rate subvention will be routed through scheduled commercial banks and housing finance companies. However , an official said banks were concerned about finding ways to deal with change in EMI after the first year as the government subvention of 1% on interest rate is available only for a year.

Source:http://lite.epaper.timesofindia.com/getpage.aspx?pageid=11&pagesize=&edid=&edlabel=TOIH&mydateHid=10-09-2009&pubname=&edname=&publabel=TOI

1% subsidy on home loans up to Rs 10L

New Delhi: In a move to boost the affordable housing sector and support middle income groups, the Union Cabinet on Thursday is expected to approve a proposal for 1% interest subsidy on housing loans up to Rs 10 lakh.

At a time when low cost is the buzzword in real estate, the scheme envisages 1% subsidy on homes loans up to Rs 10 lakh on houses costing not more than Rs 20 lakh. The subsidy will be paid from the governments kitty. Finance minister Pranab Mukherjee , in his reply to the discussion on the finance bill, had announced the interest subsidy scheme.

The proposal, which is expected to cost around Rs 1,000 crore, was welcomed by realty players and home loan companies . The move is expected to prop up affordable housing projects in Tier II & III cities as the cost of houses in metros, spiral much beyond Rs 20 lakh.

The housing ministry, though, believes otherwise, with an official saying the proposal will force private developers under tremendous stress due to economic downturn to go for low-end housing projects even in metros.

According to sources, the interest rate subvention will be routed through scheduled commercial banks and housing finance companies registered with the National Housing Bank. However , an official said there were concerns among banks on finding ways to deal with the situation on the change in equated monthly payments after the first year as the government subvention of 1% on interest rate is available only for a year.

source:http://lite.epaper.timesofindia.com/getpage.aspx?pageid=14&pagesize=&edid=&edlabel=TOIM&mydateHid=09-09-2009&pubname=&edname=&publabel=TOI

Auto, home loans see revival: Kamath

Credit demand from consumers seemed to be back on track, especially in sectors such as auto and home loans though banks had cut down unsecured loan exposures, said KV Kamath, chairman of ICICI Bank.
“So far as mortgages are concerned, I think they are back from where they were a year ago. The tension between buyer, builder, and the lender is now more or less off. Auto sector financing is also back,” Kamath said at the sidelines of a banking seminar.
The chairman of the country’s largest private sector bank felt 80 per cent of the consumer loans were back, the remaining 20 per cent mostly unsecured loans had taken a back seat.
“Unsecured consumer credit is certainly hit. Banks are not lending unsecured loans,” he said. “We at ICICI Bank have significantly slowed down unsecured loans since one year. We only give unsecured loans to few existing clients, which have deposits and a good track record with us,” he said while adding that ICICI Bank took the lead in slowing down unsecured loans.
Though home loans have picked up, commercial real estate loan demand is still slack due to excess capacity creation.
The growth of retail credit demand was not reflected in the overall credit growth numbers as a slowdown in working capital demand dragged down the overall numbers, felt Kamath.
“It’s not reflected in the numbers because lack of working capital. This loan is distorting the numbers. If we keep the working capital loan aside, lending rate will be healthy by the end of the year,” he said while adding that credit growth for 2009-10 was likely to be 29 per cent except the working capital loan.

Credit growth during April 1 to August 14 was only 1 per cent compared with 3.3 per cent a year ago.
Also, the projects, which were in a conception stage a few months back, were being implemented now, he said.
Kamath saw interest rates remaining stable going ahead.
“To me, I do not fear interest rates to go up immediately. What the Reserve Bank of India will do if inflation rears up, we think we have to wait for one month for the monetary policy. It may react based on the what is the type of inflation and whether monetary policy action will help or not,” he said.

Source : http://www.business-standard.com/india/news/india-likely-to-grow-by-7-75-in-fy10-kamath/72805/on

Take a look at some charges with home loans

While choosing a home loan, a borrower should first analyse the conditions subject to which the loan is being offered. Many of the conditions make  an impact on the total cost of the loan. In addition to the interest rate, many other costs and benefits should be analysed.

Although individually these may look insignificant, the cumulatively effect they have is substantial. A borrower can negotiate on many of these charges depending on the loan amount, tenure and his credibility.

Some charges you need to analyse:

Processing fee

Processing fee is payable at the time of filing the loan application. This is nonrefundable and is charged to cover the costs of determining the loan eligibility of the potential borrower. It varies from 0.5 to one percent of the loan applied for.

File and legal charge

This is the documentation preparation charge. Some banks charge this amount to the borrower. Legal charge pertains to the legal evaluation of the documents. Some banks charge these separately.

Commitment charge

This charge is payable if the loan is not used within a specified period of time after sanction.

Administration fee

This is payable on the acceptance of offer, i.e., once the loan has been sanctioned. The amount is the same as the processing fee -0.5 to one percent of the loan sanctioned. Some banks charge both processing fee and administration fee together.

Commencement of EMI

In some cases, the EMI starts from the month of final disbursement of loan. In other cases, it starts from the month following that. Depending on the cash flow position of the borrower, a decision on this behalf should be taken by him. The timing of commencement of EMIs has an impact on the total interest cost to be paid by the borrower over the period of the loan.

Change of mode of interest

In case you want to switch over from a floating rate to a fixed rate (because the interest rates are likely to go up) or vice versa (in case the interest rates are excepted to come down) you are required to pay an amount to the lender.

Insurance

Some banks insist that the house should be adequately insured or the borrower should take a life insurance policy where the sum assured is at least equal to the loan amount. Some offer free insurance. In case of unfortunate death of the borrower, his family is not financially-affected because of the home loan liability.

The insurance amount is used to repay the loan amount. In case of any damage to the house – by earthquake, fire, riots etc, the costs of repair or reconstruction are paid back to the borrower. This is usually in the nature of term insurance, and the premium involved is low. Many banks offer free term insurance for the tenure of the loan for the outstanding loan amount.

Switchover charge

In case the borrower decides to switch over from one bank to another, because the other is offering better terms, some banks charge a penalty. However, if the loan is repaid out of one’s own funds, these charges may not be payable.

Prepayment charge

Some banks levy prepayment penalty in case the loan is repaid before the full term or certain agreed minimum period. This is done because it disturbs their cash flow and income estimates. The amount varies from one to five percent of the outstanding amount of loan. Some banks do waive off these charges. The charges should be payable on the balance amount outstanding and not on the total amount of loan sanctioned.

Source : http://economictimes.indiatimes.com/Features/Financial-Times/Take-a-look-at-some-charges-with-home-loans/articleshow/4949841.cms

SBI Purana Bazar loan mela underway

Dimapur, August 24 (MExN): The State Bank of India, Purana Bazar Branch has launched a special campaign starting from August 24, Monday to August 26, Wednesday for Personal loan, Car loan and Home loan to government employees. This was stated by the Branch Manager, SBI Purana Bazar while also informing that all regular government employees with a minimum service length of two years serving within the district and drawing their salary through salary accounts maintained with any branch of the SBI are eligible. Among others, the campaign is giving out special concession in interest rates for car loan and Home loan for a limited period. It was informed that loan processing fee for car and home loans have been waived for a limited period. Personal loans upto Rs 3 lakh will be sanctioned and disbursed immediately on submission of necessary forms/ documents, stated the Branch Manager.
Application forms will be issued on the above mentioned dates from 10:30 am to 5:00 pm on production of original identity card and passbook besides quotation/invoice in case of car loan and patta/jamabandi, sale deed/gift deed, mutation order etc. in case of Home loan are also to be produced, it was informed.

http://www.morungexpress.com/regional/31662.html

Home loan eligibility norms

A host of factors affect the eligibility of a potential borrower. A bank has its own parameters and criteria to determine the eligibility and quantum of housing loan. A borrower would do well by being aware of these factors. Verification The application form provides information about the applicant. The information that is submitted in the application form by the individual is verified from various primary and secondary sources – through interview, calling up the employer, verifying from the bank’s database etc. In case of wrong information /inconsistencies, the loan application is liable to be rejected. Repayment capacity The financial position of the individual is an important determinant. The individual’s financial profile is an important consideration for the bank. The loan eligibility as well as repayment capacity depends on the financial position of the borrower. The income level, net income, liabilities etc determine the amount of loan a person is eligible for. The requirements include a particular minimum income or a fixed source of income. The credit history of the borrower also plays an important role. Usually, the lenders maintain a database of the borrower and verify the credit history to check out previous repayment defaults, even from other lenders. Profile The personal profile of the individual is also important. Banks take into account the personal profile of an individual. These include factors like educational qualifications, profession, number of dependents, assets owned, liabilities owed, savings history etc. A higher number of dependants or existing liabilities implies lower repayment capacity. Age It plays a major role in determining the earnings potential of an individual. In case a property is coowned, the co-owner cannot be a minor. Also, the coowner cannot be above a certain age limit. The age limits are set to minimise ownership disputes. The age limit also affects the tenure of the home loan and EMIs. The applicant’s retirement age is also considered. For example, if an applicant is 45 years of age and is set to retire at 60 years, the maximum loan tenure available will be 15 years. Also, in case the bank has a 75-year age limit for a coapplicant, and if the applicant is 40 years old and the co-applicant is 60 years old, the home loan will be sanctioned for a maximum period of 15 years only. Location of property This also affects the eligibility. Certain areas are specified as being ‘negative’ in the books of some banks. If an individual intends to buy a property in such an area, he will not be granted a loan. Banks have specific norms with respect to a minimum area of the flat. This may be built-up area or carpet area. The age of the property is also an important consideration in case of purchase of existing properties. Home loans on resale properties are sanctioned only if they are less than 50 years old. Banks conduct legal and technical appraisals of the property to see whether the title of the property is clear, there are no ownership disputes, the property is free from any encumbrances etc. In case there are any objections in these appraisals, the loan application is bound to be turned down. Each bank has a list of pre-approved builders. Their credentials will be verified by the bank and as such loans are easily available for their properties. Source : http://economictimes.indiatimes.com/Features/Financial-Times/Home-loan-eligibility-norms/articleshow/4924070.cms

NRI home loans : Financial tools for getting homes in one’s motherland

Loans are facilitating every individual in the country, whether the person be a citizen of the country or an NRI. Loans are available to the every corner of the country, with a purpose that every one should make a healthy use of it.

Loans entails as the best friend of an individual in the present scenario. Whether the person be a citizen or an NRI in the country, loans are easily approachable services which enhance the status of individuals. In the present arena, owning a home or a car is a status symbol. Loans in India has provided an edge, which has the ability of satisfying anyone’s wishes in simple and easy steps. Presently, the NRI home loan facility is available for non-resident Indian for the purpose of acquiring a home. All financial lenders go by the NRI definition guideline given by RBI i.e. “an Indian citizen who holds a valid Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for uncertain duration of stay abroad is an NRI.”

‘NRI’s are eligible to take residential property in India. Different banks use different criteria for lending to NRIs, including the various mandatory aspect of financial lenders as- An NRI must have an account with the lending bank. He should tend to earmark the deposit held in addition to the mortgage on the property Else all required documents are similar to those applicable to the local residential persons Non-Resident Indians (NRI) can apply for a loan for construction, renovation, alteration or repairing of a house or for purchasing a plot or house in the country. Since, the interest rate for the NRI home loans do not vary much from the the one charged for Indian citizens. But they could get their loan sanctioned for the shorter period of time. For a home loans, NRIs get only 85 per cent of cost of loan. Whereas, the loan-size depends on the refunding capacity of the borrower. The loans equivalent to 36 times of the gross monthly earning of the applicant may be issued.

On the other hand, the car loans are available for all kinds of people to satisfy their various needs with different names. Which could be auto loans bad credit, fast auto loans, logbook loans, auto loan after bankruptcy, sub-prime auto loans, cheap auto loans and many more, which are further bifurcated in secured and unsecured ones. Lenders offers you the best possible option of car loans, whether you need to purchase a new car or an old one. Banks like ICICI, Bank of Baroda, State Bank of India, HDFC etc. are some institutions offers fixed as well as floating interest rate for a tenure, ranging from three to five years.

In India, millions have been fulfilled the availability of various car loans scheme offered by the numerous financial lenders and banking organization, which even enables consumers to own the latest model of cars of various manufacturer like Hyundai, Maruti, Tata, Fiat, Ford etc. the eligibility criteria to avail the car loan, seeks an individual to be between the age of 21 to 65 years as well as the person should be salaried person, professional, or self-employed. The car loans can be availed, when the individual’s net annual income must be more than INR 1,00,000. Whereas, it could get sanctioned when it will be of about 2.5 times the net income of the person.

http://www.bestsyndication.com/?q=20090821_nri_home_loans.htm

Independence special offer on HDFC home loans

The country’s second largest private mortgage lender, Housing Development Finance Corporation (HDFC) Bank has come with a special Independence Privilege Offer’ for its home loan customers.

The offer is a valid for a limited period up to August 15, the marks the country’ Independence Day.

Under the offer the salaried individuals can avail special benefits on home loans like discounts on processing fees.

As a part of its drive, the bank is providing personalised home loan counselling and doorstep assistance to prospective customers.

C V Ignatius, general manager, HDFC, Kerala explained that the offer will help the customers in buying property.

He also added that the possibility of lowering of property prices from the current levels is rather low.

During the past few months, property rates have corrected concurring with lowered rates of interest. The demand for credit is yet to take off and interest rates might lower only marginally as many bankers have indicated.

The Reserve of India in its first quarter (2009-10) review of monetary policy has kept the prime lending rates and reverse repo rate unchanged. The prime lending rate of the bank currently at pegged at 4.75 percent, which is lowest in the past nine years.

However, it is expected that in near future interest rates will harden over a period of next 12 months.

The benchmark lending rate is currently pegged at 15.75 percent per annum.

Source : http://www.rupeetimes.com/news/home_loans/independence_special_offer_on_hdfc_home_loans_2744.html

SBI peps up home loans

Mumbai, Aug. 7: The State Bank of India today fired a fresh salvo in the housing finance market by capping the interest rate at 8 per cent for five years on loans of up to Rs 5 lakh.

The bank said it would also provide loans up to Rs 50 lakh at 8 per cent for the first year and 8.5 per cent in the second and third years. The SBI has turned aggressive in the highly competitive home loan market, which has been dominated by HDFC.

HDFC now provides new home loans up to Rs 15 lakh at an interest rate of 8.75 per cent. For loans between Rs 15 lakh and Rs 30 lakh and that above Rs 30 lakh, it stands at 9 per cent and 9.50 per cent, respectively, for a 20-year tenure.

The SBI’s home loan offers are easily the cheapest in the market today.

Back in February, the SBI stunned the market by capping the interest rate on all home loans at 8 per cent in the first year. It improved the bait in June when it set a Rs 30-lakh cap for its Easy Home Loan Scheme, which fixed interest rates at 8 per cent in the first year and 9 per cent in the second and third years.

The SBI today said it was launching a three-month long “SBI My Home Campaign” from August 8 to facilitate home buyers during the forthcoming festival season. The bank said it would not charge any processing fees on the home loans.

Individuals can now borrow up to Rs 5 lakh under SBI Hi-Five Home Loan at an interest rate of 8 per cent fixed for a period of five years. Thereafter, the customer has an option to choose between a floating rate of 2.75 per cent below the State Bank Advance Rate (SBAR) and a fixed rate of 1.25 per cent below the SBAR for a further loan term of five years. The SBAR is the bank’s benchmark rate and stands at 12.25 per cent.

Borrowers of home loans of up to Rs 50 lakh will have the option at the end of three years to choose between a floating rate of 2.75 per cent below the SBAR and a fixed rate of 1.25 per cent below the SBAR. The tenure of these loans can stretch up to 25 years.

P. Nandkumaran, general manager, retail loans at the SBI, told The Telegraph that in the second scheme, the effective rate of interest for the entire tenure of the loan will be around 8.71 per cent.

“No bank now offers that kind of rate and if we were to minus the processing charges, the effective rate will come down further by another 10 basis points,” he said.

IDBI rate cut

IDBI Bank has slashed interest rates on deposits by 25-50 basis points across different maturities, effective August 12. The lender has also cut auto loan rates by one percentage point. The bank has not made any change in rates for deposits up to six months.

Nandkumaran said the bank had seen home loan sanctions jumping to Rs 2,100 crore a month from Rs 1,500 crore since it offered the 8 per cent interest rate scheme. “We expect a much better response from this scheme,” he said.

Analysts aver that while the market share of the SBI in the home loan segment has risen over the past six months, HDFC continues to be the leader. The SBI’s market share in the home loan market is now reported to be a little over 20 per cent. Although present figures for the country’s largest home financier HDFC is not known, the corporation had a market share of 40 per cent during the fiscal year ended March 31.

Source :http://www.telegraphindia.com/1090808/jsp/business/story_11335730.jsp

SBI’s launches ‘My Home’ campaign for home loans

MUMBAI: State Bank of India on Friday said that it was launching a three-month long home loan campaign at attractive interest rates and zero  processing fee to facilitate home buyers during the forthcoming festival season.

Christened SBI My Home Campaign, it will be launched tomorrow, a press release issued here said.

The public sector lender said that one could borrow up to Rs 5-lakh under the SBI Hi-Five Home loan at 8 per cent interest (fixed) for five-years.

Thereafter, the customer has an option to choose between floating rate of 2.75 per cent below the State Bank Advance Rate (SBAR) or a fixed rate of 1.25 per cent below SBAR for a further loan term of five-years, the release said.

For those needing loans up to Rs 50-lakh, there is the SBI Easy Home Loan, where interest is fixed at 8 per cent during the first year and 8.5 per cent per annum during the second and third year.

After three-years, the customer can choose between a floating rate at 2.75 per cent below SBAR or a fixed rate at 1.25 per cent below SBAR.

Customers can further consolidate the gains of lower interest rates by availing SBI’s Maxgain overdraft facility, the release said.

Source : http://economictimes.indiatimes.com/Personal-Finance/Loan-Centre/Home-Loans/SBIs-launches-My-Home-campaign-for-home-loans-/articleshow/4868022.cms

Realtors rebuild hopes on rising home sales

After a long hiatus, home sales are finally back on track. Sales of major real estate developers have more than trebled in the June quarter compared to the preceding three months, amid growing expectations that the good times will continue to roll.

Consider this: DLF, the country’s largest real estate developer by market value, has sold 2,500 apartments in the first quarter of the current fiscal, compared to nearly 600 in the quarter ended March 2009. In the preceding quarter, DLF had sold just about 120 apartments.

Unitech, the country’s second largest property developer, went a step further and sold 5,000 units in the first quarter, compared to 300 to 400 apartments in the preceding quarter.

Delhi-based Parsvnath Developers did 100-odd transactions against 25 to 30 in the previous quarters, and Omaxe reported sales of 700 units, compared to 200 in the same period.

“After a few difficult quarters last fiscal, we have seen a fairly good first quarter of the current fiscal. The economy on the whole has been showing signs of recovery, and activity in real estate has picked up,’’ DLF Vice-Chairman Rajiv Singh said.

Almost all of them are convinced that the future looks bright. While DLF’s Singh said he expected the market to improve, a Unitech spokesperson said the market would pick up in the second quarter, though demand would be mainly for affordable products.

“It is a good time to bargain-pick now,” said Ravi Ramu, director of Bangalore-based Puravankara Projects.

That the first-quarter sales are no flash in the pan is reflected in the fact that developers have lined up around 60 million square feet of new launches this year, more than double last fiscal’s bookings.

DLF plans to launch 8 to 9 million sq ft of city centre projects in Chennai, Kochi, Delhi and Gurgaon and 5 to 8 million sq ft of mid-income housing projects in the National Capital Region and southern cities. Unitech has launched buildings covering 15 million sq ft since April and plans to launch an additional 15 million by March 2010.

Apart from lower interest rates and affordable housing, the reduction in the number of fence-sitters has helped in a major way. ICICI Bank Chief Financial Officer N S Kannan said buyers had been postponing their purchase decisions in the hope that prices would fall further.

“There is a general sense now that prices have stabilised,” he said, adding “our disbursements, month-on-month, have increased and we would like to play in that market based on our current strategy on pricing”.

Though Kannan was not willing to comment on a specific number, sources in the bank said it was expecting a 20 per cent growth in disbursals in the second quarter.

SBI, the country’s largest bank, has set a monthly home loan disbursal target at Rs 2,500 crore compared to Rs 1,500 crore disbursed over the last few months. The bank is targeting a home loan growth of 30 per cent in the current fiscal against 21 per cent in 2008-09.

HDFC, the country’s largest home loan lender, saw its disbursals rise 22 per cent in the first quarter and expects the trend to continue.

While several property developers have ventured aggressively into Rs 20-Rs 60 lakh apartments and launched properties that were 20 to 30 per cent lower than the prevailing rates, interest rates have also softened in the last six months, which eased the monthly loan pay-outs of home buyers.

In December, the Indian Banks’ Association (IBA) and its members in December had announced new rates, under which loans up to Rs 5 lakh was offered at 8.5 per cent and those between Rs 5 lakh and Rs 20 lakh at 9.25 per cent.

Private sector banks have also reduced their retail lending rates 50 to 100 basis points in the December 2008-June 2009 period.

Analysts are also gung-ho. Pankaj Kapoor, chief executive of Liases Foras, a real estate research firm, said the momentum would increase after Diwali. “Now we are seeing a momentum for some time, lull for the next few days and then momentum. This will change as the economic recovery gathers steam,’’ he said.

Source : http://www.business-standard.com/india/news/realtors-rebuild-hopesrising-home-sales/366216/

SBI disburses home loans via special channels

Country’ largest lender, State Bank of India has been disbursing home loans via non-conventional channels.

Recently, the bank organized a three days ‘SBI Home Fair 2009′ at Mayor Ramanathan Chettiar Centre in Chennai.

The bank has also entered into alliance with 12 builders to promote the home loan segment.

On the occasion, J. Chandrasekaran, Chief General Manager, State Bank of India, Chennai Circle, said that the bank is planning to create special processing channels to extend speedy service to home loan customers.

Explaining the home loan market is conducive, he said, “As builders say the prices have softened, the home loan disbursement is expected to improve.”

The bank aimed to promote its recent home loan scheme – SBI Easy Home Loan and SBI Advantage Home Loan at the exhibition.

At the exhibition, the bank also offered spot in-principle sanction letters to prospective borrowers.

The growth in home loan growth was than more than Rs. 1,000 crore in 2008-09 for the Chennai circle.

The bank has extended 1,800 home loans, amounting Rs. 240 crore during the first quarter of this fiscal in Chennai region, of which nearly 90 percent were less than Rs.30 lakh.

Chandrasekaran stated that the applicable interest rate on home loans approved at the fair would is set to be 0.25 percent less than the normal rate from the fourth year of repayment. He also added that there would be no processing fees on loans.

As many as twenty-four builders and property developers participated in the fair.

Source : http://www.rupeetimes.com/news/home_loans/sbi_disburses_home_loans_via_special_channels_2674.html

SBI to step up home loan disbursals

MUMBAI: State Bank of India (SBI), which is said to have kicked off a war on home loan rates a few months back when it launched the 8% scheme, is set to have stepped up the ante by raising the target on sanctions each month.

SBI had frozen interest rates on new home loans for a period of one year at 8% in February, which was then extended up to September 2009. The initial announcement had triggered speculation that SBI had kicked off a rate war to take on leaders like Housing Development Finance Corporation (HDFC). It also led to HDFC chairman Deepak Parekh calling it a gimmick.

Now, SBI seems to be taking the war to another level. The largest bank has raised the target for home loans to Rs 2,500 crore every month from Rs 1,500 crore disbursed over the last few months. Sources at SBI said that even as the 8% scheme initially witnessed a shift of customers from other lenders, of late, the bank has seen a rise in enquiries from fresh borrowers.

Another indication of the home loan war heating up is the fact that SBI is targeting a growth of 30% in this financial year compared with 21% in 2008-09. On the other hand, HDFC, which saw a growth of 21% in loan disbursements in the previous fiscal, is expected to maintain a growth rate of 18-20% for this fiscal.

SBI is seeing an increase in home loan demand from new borrowers, and loans of up to Rs 20 lakh constitute 75% of its loan book, sources said.

SBI has raised the overall target for home loans to Rs 30,000 crore in 2009-10, which is only slightly lower than HDFC’s loan approvals of Rs 39,650 crore in 2008-09.

In an interview to UTVi earlier this month, HDFC vice chairman and managing director Keki Mistry had said that the lender had loan approvals of over Rs 30,000 crore, and that the 8% scheme of SBI was unlikely to take away business significantly.

Its clear that the country’s biggest nationalised bank, which has a market share of 18-20% in housing loans, is now also looking to being the largest lender in home loans..

Home Loans: Some Facts
SBI has fixed 8% for home loans for first year
SBI has fixed 9% for home loans up to Rs 30 lakh for 2nd and 3rd year
SBI has fixed 9.5% for home loans over Rs 30 lakh for 2nd and 3rd year
HDFC charges 9.25% for loans up to Rs 30 lakh
HDFC charges 9.75% for loans over Rs 30 lakh
SBI home loan portfolio at Rs 56,000cr in FY09
SBI’s home loans grew at 21% in FY09
SBI looking at 30% growth in home loans in FY10
HDFC FY09 loan disbursements at Rs 39,650cr in FY09, growth of 21% YoY
HDFC loans of up to Rs 20 lakh constitute 50% of the loan book
HDFC has market share of 40% followed by ICICI Bank at 21% and SBI at 8%
Analysts say HDFC has around 30% market share in tier-II, tier-III cities
HDFC looking at maintaining 20% growth rate in FY10

Source : http://www.utvi.com/industry-news/banking-industry-news/27079/sbi-to-step-up-home-loan-disbursals.html

LIC Housing Finance cuts interest rates for new customers

Mumbai (PTI): LIC Housing Finance on Thursday said that it has cut interest rates for new customers.

It has introduced a new scheme, a three-year ‘Fix-o-Floaty’ scheme, which offers flexibility to customers as well as protection against the volatilities of interest rate momvement.

Under this scheme, borrowers will pay a fixed interest rate of 8.9 per cent for loans up to Rs 75 lakh and 9.5 per cent for loans above of Rs 75 lakh for a period of three-years, a press release issued here stated.
Thereafter, a floating rate prevailing at the end of three-years will have to be paid, the release said.

This scheme for new customers comes into effect from today.

At any time during the three-year initial period, the customer has a choice of shifting to the floating interest rate without any additional charges, the release said.

For home loan borrowers preferring floating rates ab-initio, the special offer rates for new customers for loans up to Rs 75 lakh will be 8.50 per cent, as against 8.75 per cent to 9.75 per cent. For loans above Rs 75 lakh, the rates will be 9.50 per cent as against 10.25 per cent earlier.

Source : http://www.hindu.com/thehindu/holnus/006200907030344.htm

Banks woo new borrowers with lower rates

At a time when there is ample liquidity in the system and business confidence is none too high, banks are making every effort to give a fillip to Budget and home loan rates Choose schemes that suit you
economic activity. Lenders are launching new schemes to woo customers to borrow, giving concessions on interest rates, waiver on processing fee, free insurance cover, et al. And, in the process of wooing new borrowers, banks are offering lower rates to new customers while old customers continue to be saddled with higher rates, despite both having opted for floating rate loans.

Banks justify their stand on the grounds that they are trying to build their loan portfolios, but old customers say they have to pay a higher price for no fault of theirs. Even the new deputy governor of Reserve Bank of India (RBI), KC Chakrabarty, in his former avatar as CMD of Punjab National Bank, advocated the pass-through of the benefits of a lower interest rate to old customers.

“Existing customers should always be pampered and given preferential treatment because ultimately they are the brand ambassadors for the bank,” said MV Nair, chairman of Indian Banks’ Association and CMD, Union Bank of India. “Even if banks offer a concessional interest rate to new customers, they should ensure convergence of rates for both new and old clients. Also, it is unfair to old customers, especially since they do not have bargaining power.”

Although the interest rates paid by both old and new customers are linked to a bank’s prime lending rate (PLR), rate to which all loans are benchmarked, the variation is aimed at protecting a bank’s margins. “If a lower interest rate was applicable on a bank’s entire retail loan portfolio, its overall yield on the portfolio would reduce,” Hemindra Hazari, head of research at Karvy Securities, said. “Hence by doing this (charging a differential rate of interest), banks can acquire new customers without lowering the yield on their entire retail loan portfolio.”

A bank typically protects its margin by varying the spreads, the difference between PLR and rate charged to customers, on loans at different periods of time. This may be driven by factors such as competition, liquidity conditions, a desire to increase market share and political exigencies. For instance, all banks currently offer home loans below PLR. But, loans to old customers are at a narrow spread below PLR while those to new customers are at a wider spread below the benchmark rate.

However, AC Mahajan, CMD of South-based Canara Bank, strongly feels that banks have not been unfair to their old customers. “In a non-volatile situation, the rates should ideally remain same for all customers. In other words, spreads above and below BPLR should not vary. But in a volatile market condition, where credit demand and resources determine interest rates, banks, at times, take a commercial decision to forgo profit margins instead of losing revenue by not deploying funds. And that is why spreads change at different points in time and from one customer to the other,” explains Mr Mahajan.

Bankers say the risk premium changes from time-to-time, depending on the business confidence in an economy and that is why spreads cannot remain constant for all customers in a particular segment at all times. “That is the beauty of floating rates of interest and that is why they are called market-determined rates,” says Mr Mahajan.

Concurring with him, KR Kamath, CMD of Kolkata-based Allahabad Bank, says it is not possible for banks to charge the same rate to all customers of the same portfolio all the time.

“At times, banks offer lower rates to new retail customers because they want to build their retail loan portfolio or at times they increase the Budget and home loan rates Choose schemes that suit you
rate for new customers (as it happened in the case of NBFCs and real estate, a few years ago) because RBI asks banks to provide higher risk weightages on a particular sector. So, there will be anomalies. But, broadly, customers who have opted for floating rate loans will get the benefit of lower rates when interest rates fall.”

No matter how justified banks might be, RBI will take a closer look at the differential rates offered to new and old customers. The recently-constituted committee on BPLR will have to decide whether banks can continue this practice forever.

Most bankers right now point fingers at the opaqueness in computing PLR. Nearly three-fourths of the loans given by banks are at rates which are below PLR. By definition, PLR is the rate banks should charge their prime customers. However, in current times, PLR is the rate banks often charge customers with an average credit rating.
“The biggest culprit here is a sub-PLR loan. That banks are allowed to lend below PLR itself means that PLR is not a fair rate,” pointed out G Narayanan, executive director of Indian Overseas Bank.

Echoing his view, Mr Nair of Union Bank of India, says, “PLR does not give a fair indication of the rate banks are actually charging their prime customers. Once we move towards a system where the benchmark rate actually reflects the rate prime customers are paying, some of these issues can be resolved.”

Source : http://economictimes.indiatimes.com/Opinion/Money–Banking/Banks-woo-new-borrowers-with-lower-rates/articleshow/4722379.cms?curpg=2

SBI sees revival in home loan demand with low-interest schemes

State Bank of India’s home loan disbursements under its ‘New happy home loan scheme’ have grown at Rs1,500 crore monthly. This is about Rs400 crore more than the monthly average of Rs1,100 crore it did in the first two months since the scheme was announced.
“Till March we had done Rs 2,348 crore. Subsequently we are sanctioning Rs1,500 crore every month,” P Nandakumaran, chief general manger, personal banking, reportedly said.

Banks which have made aggressive rate cuts have begun to reap the benefit of a revival in home loan demand. They have been able register a jump in their home loan disbursal in the last couple of months by attracting new home buyers as well as existing customers from the other banks and institutions. (See: Public sector banks woo customers with ‘balance transfer’ on home loans)

”About 40 per cent of the new customers that the bank is attracting are those migrating from other banks and institutions that have higher rate of interest. The home loan market is reviving with prices having corrected particularly in tier II and tier III cities. With signs of recovery in the economy, and with people being more certain of their jobs, so many enquiries are translating into sales,” said Nandakumaran.

In the first week of February, SBI had announced an interest rate of 8 per cent for one year – the lowest so far among lenders. In the second year, the rates applicable will be the prevailing rates then.

The bank’s move was to stimulate demand in the housing market at a time when many buyers postponed their purchasing decisions amid economic uncertainty and fear of job losses. The scheme has now been extended till September.

The bank also offers other schemes, which will be valid till the month-end. Under this, it offers a home loan between Rs5 and 20lakh at a fixed interest rate of 9.25 per cent a year for five years, after which rates will be re-set.

SBI, which claims to have the highest growth in its home loan portfolio last fiscal, saw its advances swell to Rs 54,063 crore. This is a 21-per cent increase from Rs 44,626 crore in the previous fiscal. During the same period, the bank’s market share grew to 19.74 per cent from 17.48 per cent.

Banks say home loan disbursals will gather greater momentum in the second quarter of the current financial year after the budget, as they expect major tax breaks for the housing sector.

More than 85 per cent of the home loan market is accounted for by three players – HDFC, ICICI Bank and State Bank of India.

Source : http://www.domain-b.com/finance/banks/SBI/20090629_home_loan_2.html

Happy home scheme: SBI loans Rs 1,500 cr a month

State Bank of India’s disbursements on home loans under its ‘New happy home loan scheme’ have grown at Rs 1,500 crore monthly. This is about Rs 400 crore more than the monthly average of Rs 1,100 crore it did in the first two months since the scheme was announced.

“Till March we had done Rs 2,348 crore. Subsequently we are sanctioning Rs 1,500 crore every month,” P. Nandakumaran, Chief General Manger, Personal Banking, SBI, told Business Line.

In the first week of February, SBI had announced that it will offer an interest rate of 8 per cent for one year – the lowest so far in the industry. In the second year, the rates applicable will be the prevailing rates then.

To stimulate demand

The bank’s move was to stimulate demand in the housing market at a time when many buyers postponed their purchasing decisions amid economic uncertainty and fear of job losses. The scheme has now been extended till September.

The bank also offers other schemes, which will be valid till the month-end. Under this, it offers a home loan between Rs 5 and 20 lakh at a fixed interest rate of 9.25 per cent a year for five years, after which rates will be re-set.

SBI, which claims to have the highest growth in its home loan portfolio last fiscal, saw its advances swell to Rs 54,063 crore.

This is a 21-per cent increase from Rs 44,626 crore in the previous fiscal. During the same period, the bank’s market share grew to 19.74 per cent from 17.48 per cent.

Source : http://sify.com/finance/fullstory.php?a=jg3klpaicdf&title=Happy_home_scheme_SBI_loans_Rs_1_500_cr_a_month&?vsv=TopHP2

Reduce tenure, not EMI, when home loan rates dip

It saves a lot in final calculation.

Home loan borrowers would now be heaving a sigh of relief. After over three years, home loan rates are beginning to come down as the Reserve Bank of India (RBI) has brought down benchmark rates and has been persuading banks to do so.

In the last five-six months, all major banks such as State Bank of India (SBI), ICICI Bank and HDFC Bank have cut their prime lending rates (PLRs) and consequently, home loan rates.

As a result, many borrowers now have the option of either reducing their equated monthly instalments (EMIs), or loan tenure. Reduced EMIs may be very appealing to borrowers because of a lesser burden on a monthly basis, but there is a catch to it. If the tenure remains unchanged, there is a higher interest outgo. An example should make this clear. If you have taken a loan of Rs 50 lakh at 10 per cent interest for 15 years, the EMI would be Rs 53,730. Now, say, the interest rate falls to 8 per cent at the end of the third year. The bank gives you an option to either reduce the EMI or the tenure. Here’s how your options work out: With an outstanding principal of almost Rs 45 lakh at 8 per cent for 12 years, the revised EMI would be Rs 48,667 — a reduction by Rs 5,063 per month. But continuing with an EMI of Rs 53,730 would lead to winding up of the loan in 123 months (10 years and 3 months). That is, a saving of interest payment of 21 months (12 years = 144 months). The saving is a huge Rs 4.10 lakh (approximately).

This is the reason why financial planners say that reducing the tenure should be of prime importance. “One should always look at the lowest tenure possible and then take a call on the EMI,” said Gaurav Mashruwala, a certified financial planner.

According to him, even if tax deductions were good, a big loan could always hurt because of unpredictable interest rate movements.

Source : http://www.business-standard.com/india/news/reduce-tenure-not-emi-when-home-loan-rates-dip/361893/

Jaipal Reddy favors cheaper housing loans to poor

(RTTNews) – India’s Urban Development Minister Jaipal Reddy pitched for affordable housing to the poor at 6.5 percent interest to help revive the ailing real estate industry which generates considerable employment opportunities. In a pre-budget meet with the finance minister Pranab Mukherjee, he favored cheaper loans for buying houses in the below Rs.5-lakh category and sought the extension of 7.5 percent interest scheme presently available for flats up to Rs.20 lakh to those priced at Rs.30 lakh in cities.

Additionally, he urged the finance minister to increase the income-tax limit exemption on rental income from house to 50 percent, sought more budgetary provisions for the 2010 Commonwealth Games projects and requested to sanction more money for extension of the Metro network in the national capital, and for projects under the Jawaharlal Nehru National Urban Renewal Mission, the flagship program for developing basic urban infrastructure and urban slum development.

Source : http://www.rttnews.com/ArticleView.aspx?Id=981422&SMap=1

Hike expected in Income Tax Exemption on Home Loans

The government is considering a proposal to hike income-tax exemption available for interest payment on home loans to Rs 2.5 lakh a year, to boost demand and rebuild the slowdown-hit housing industry. The ministry of housing and urban development has urged finance minister Pranab Mukherjee to make an announcement to this effect as part of his Budget presentation in early July, a government official said on condition of anonymity.

At present, taxpayers taking housing loans are eligible for income-tax exemption on interest payment of up to Rs 1.5 lakh every year. Besides this, the repayment of principal amount is part of investments eligible for benefit under Section 80(C) of the Income-Tax Act, which has a ceiling of Rs 1 lakh. The government has already identified housing as one of its focus areas, a fact highlighted by President Pratibha Patil in her address to both the houses of Parliament. The existing tax exemption limit is considered inadequate at a time when a two-bedroom house in big cities costs at least Rs 25 lakh. Considering a person takes a loan of Rs 20 lakh at an interest rate of 9.5%, he would pay Rs 1,88,493 towards interest alone in the first year. His annual interest payment in the first five years would be more than Rs 1.5 lakh.

If the exemption limit is hiked to Rs 2.5 lakh, then a person paying that much home loan interest in a year will save an additional Rs 31,000 in tax every year. This saving of over Rs 2,500 a month would be significant for most borrowers, making home purchases more affordable. However, as per existing norms, the tax benefits start flowing in only after the construction of the house is completed, which usually takes 2-3 years in case of builder flats.

The housing industry has urged the government to allow for the deduction as soon as loan repayment starts, as it would give substantial relief to home buyers and boost demand. The Budget documents do not provide an estimate of the revenue forgone on account of this exemption, but it is unlikely to be very significant. Of the total Rs 38,107-crore tax revenue forgone on account of tax exemptions to individuals in 2007-08, nearly Rs 30,000 crore is on account of Section 80C benefit, one component of which is principal repayment on housing loan.

The housing sector in the country has been hit hard by demand slowdown, following a rise in interest rates. Besides lowering of home loan interest rates, the industry has been continuously pitching for greater tax benefit, as it had the potential of stimulating demand.

Source : http://www.indianrealtynews.com/real-estate-india/hike-expected-in-income-tax-exemption-on-home-loans.html

Loans likely to get cheaper as Govt prods banks to cut rates

New Delhi, June 10 (PTI) Home and other retail loans and industrial lending may become cheaper soon as public sector banks are likely to cut interest rates after the government today prodded lenders to provide credit at reasonable rates to spur the economy.
“Our bank will decide on lowering interest rates by the end of this month,” country’s largest lender SBI’s Chairman O P Bhatt told reporters after a meeting between PSU bank heads and Finance Minister Pranab Mukherjee here.

Expressing concern over non-availability of credit at affordable prices from banks, Mukherjee said, “As a financial intermediary, the banks have to stand-by to provide credit at reasonable rates. This is an area of concern in many quarters both within the government and outside,” he said.

He said reduction in key rates by RBI is not getting adequately reflected in the reduction of prime lending rates by banks. “I would urge the banks to address these concerns expeditiously and in adequate measure. This will help restore the environment for rapid growth and ensure that the growth process benefits all our people,” Mukherjee said.

To a query as to how much the rates could be cut, the finance minister told reporters, “All possibilities will be explored.I can’t quantify it (rates cut).” PTI

Source  : http://www.ptinews.com/pti/ptisite.nsf/0/F7FA005069D1F8F3652575D1003F7D5E?OpenDocument

Public sector banks woo customers with ‘balance transfer’ on home loans news

Public sector banks have started aggressively wooing home loan customers away from private sector banks and HFCs with ‘balance transfer’ facilities to encourage them to make the switch. However, in the process they are not letting their guard down even as they seek to build their retail loan book. Caution in respect of the quality of assets remains the key concern even as the banks go all out to attract potential switch prospects.

What public sector banks have going for them is the interest rate differential on the home loans they offer and that of private sector banks and housing finance companies. When this is large enough, the customer has a good incentive for making a switch. For example on a Rs30-lakh home loan with a 20 year tenure, public sector banks currently charge a floating interest rate of about 9.25 per cent, while select private sector banks / HFCs are quoting between 9.75  and 10.50 per cent.

According to a senior public sector bank official, customers would do well to first do a cost-benefit analysis before opting for a transfer of their outstanding home loans from one bank to another. The reduced EMI instalments should far outweigh the processing fee charged by the new bank and the penalty charges that the closing of the loan account with the old bank would attract.

According to another senior official of a different public sector bank, customers opt for balance transfer due to the extremely competitive rates vis-à-vis rates charged by private banks. However the transfer process is preceded by a due diligence exercise on the customer.

The State Bank of India, the country’s largest bank, has reportedly received a huge number of applications for takeover of home loans, ever since the launch of its special home loan scheme offering loans at 8 per cent. According to an official the response has been very positive and offers the bank a way to enhance its position in the home loans market.

Andhra Bank too has taken over home loans from private sector banks and is known to be aggressively pushing to up its retail loan share. However, according to a senior bank official it is not that the bank takes any customer who wishes to switch over, rather there is a rigorous process that is followed which includes checking the title deeds and carrying out all due diligence. The customer stands to benefit as the bank charges a lower rate of interest than its competitors in the private sector.

However, not all public sector banks encourage takeover of loans as there is much uncertainty and risk involved. For instance, if the interest rates were to fall again, the customer shifting out cannot be ruled out. Several public sector banks therefore remain wary of loan acquisitions and agree to in on a selective basis.

Banks that have made deep rate cuts have started reaping the benefit of a revival in home loan demand. They have been able to ramp up their home loan disbursals in the last couple of months, attracting new home buyers as also customers from other banks and institutions.

According to banks loan disbursals will gather traction in the second quarter of the current financial year. They expect the budget provisions to offer major tax breaks for the housing sector.

Three large players – HDFC, ICICI Bank and State Bank of India account for more than 85 per cent of the home loan market with SBI disbursing Rs2,358 crore of home loans in the first two months of the launch of its Happy Home scheme that offers loans at 8 per cent interest. The scheme was launched in February 2009 and has enabled the bank to post a 15 per cent growth in its home loan portfolio. The scheme offers the cheapest home loans in the market today.

Source : http://www.domain-b.com/finance/banks/20090608_public_sector_bank.html

EMIs to ease with lowering interest rates

As banks line up to cut the lending rates on the loans, it is expected that market demand for loans will boast. On the consumer side, it would mean easing of the EMI (repayment) and low cost of the advances. The move is also expected to give a boost to the flagging home loan market.

It was for the third time, since December 31, 2008, that the leading private sector lender, ICICI Bank has lowered the lending rates by 50 basis points. With this, the floating reference rate (FRR) and the benchmark advance rate have come down to 12.75 percent and 15.75 percent respectively.

Chanda Kochhar, managing director, ICICI Bank, said, “The new rate on home loans up to Rs 30 lakh for 20 years will be 9.25%. On loans between Rs 30 lakh and Rs 1 crore, it will be between 9.25% and 9.75% and beyond that it will be between 9.75% and 11%, depending on the creditworthiness of the customers.”

Many public sector banks have already reduced the lending rates on the home loans, though centre sees more scope for reduction in the interest rates. Major banks, including SBI, and IDBI have been considering further cut in the interest rates. PNB, which has the lowest lending rate of 11 percent, might not lower the lending rates.

AV Bundellu, deputy managing director (retail), IDBI Bank, said: “A lower inflation rate is out today. Interest rates should come down when there is access to low-cost funds. We have revised the rates twice in May. Now the signals will be the monsoon, inflation, and reforms by the new government.”

He added, “We need to see how demand picks up. If there are positive sentiments, we may see things improving by August-September. We are waiting for deposits to grow.”

According to industry experts, with the declining rate of deposits, the lending rates might not lower much. It is also reasoned that banks cannot reduce the lending rates beyond a certain limit, as money will get diverted into other schemes like the postal savings, NSC, PPF which offers 8-9 percent.

Source : http://www.rupeetimes.com/news/home_loans/emis_to_ease_with_lowering_interest_rates_2516.html

Don’t switch loan for marginal benefit

When fears of a negative inflation rate loomed overhead, the Reserve Bank of India (RBI) stepped in to take control measures. To sail over the  economic slump and increase borrowing, the central bank brought down the key policy rates drastically. Some banks were quick to pass the benefits of lower rates to their existing borrowers. Others still offer a double digit interest rate.

If you are still not getting the benefit of a single digit rate of interest on your home loan, consider switching. The election verdict can prove to be a blessing for borrowers. A stable and strong government at the centre can mean increased political stability. Everyone can expect the economy to be back on track much sooner. Foreign investors who withdrew in haste can be seen to make a beeline again. Increased economic activity and increased employment opportunities coupled with lowering of the interest rate burden can be good news for home loan borrowers.

The rate of interest offered by different banks is the key element to compare when exploring to switch. Shop around for who offers the best rate of interest. Find out if your existing lender has any plans of lowering rates in the near future. Talk to the bank’s existing customers about the lender’s customer service and frequency in which he passes rate hikes and cuts to them. Does the new lender offer different rates for existing borrowers and a much lower rate for a new applicant? Many banks offer home loans with interest rates in the range of 8-9.5 percent.

Some banks allow the applicant to add the cost of interiors, deposits and additional expenses to the loan amount. Some lenders seek absolutely no pre-closure or part-payment charges. It means the borrower can move out with his loan at any time without any penalty on part or full closure. Look for banks that do not charge switching fees or levy penalties. Do not switch in haste for a very marginal rate benefit, say of half a percent.

This is because switching comes with additional expenses. The existing lender may charge a prepayment penalty of as much as two percent on the loan amount outstanding. The new lender may charge some processing fee. On the whole, switching frequently could mean loss in the form of fees and penalties. Consider transferring your home loan only to a lender who offers significantly lower rates.

Increased stability on the political front with better decision-making capabilities and a strong government can infuse speedier economic and financial recovery of the system. Should you switch at this juncture? Yes, if you are still paying a high rate of interest on your loan.

Source : http://economictimes.indiatimes.com/Features/Financial-Times/Dont-switch-loan-for-marginal-benefit/articleshow/4599207.cms

Home, car loans to get cheaper by 0.5%

By Abhishek Anand & Sarbajeet K Sen Interest rates are in for another cut. At least three public sector lenders—Bank of Baroda, Corporation Bank and Bank of Maharashtra— said they would reduce their lending rate for the best clients. The reductions are expected to be around 50 basis points, or half a per cent.

The cuts are being implemented in the run up to the proposed meeting of chiefs of public sector banks with the Finance Minister, Pranab Mukherjee on June 12. Mukherjee had said on Wednesday that he would talk to the banks to reduce interest rates.

This might be an indicator to a broad-based industry-wide reduction of prime lending rate (PLR) by other government-owned banks.
“Our asset-liability committee would be meeting on Saturday. The reduction could be in the region of 50 basis point,” J M Garg, chairman and managing director of Corporation Bank told the Financial Chronicle. At least two other bank chiefs said that their committees would be meeting shortly. The committee at each bank is the authorised body to take a final call on interest rates.

Garg said that his bank had already brought down its rate sharply. “We have reduced our PLR from 14 per cent to 12 per cent in the last couple of months. Nearly 75 per cent of our corporate lending in any case takes place below PLR. The proposed rate reduction would provide mean lower interest rates on retail lending as well and would benefit retail customers,” Garg said.

Reduction in the PLR has an immediate softening impact on all loan rates, including corporate loans, home loans, car loans and education loans as all of them are linked to the benchmark rate.
A senior banker from a New-Delhi based public sector bank agreed with Garg and said that the prevalent view in the industry is for a 50 basis points cut and not a deeper one. “The sense that I am getting after talking to most banks is that everyone is gearing towards a 50 basis points reduction in lending rates. The reduction would take place within a fortnight,” the banker said on the condition of anonymity.

At present, the PLR of most public sector banks stand at around 12 per cent, while Punjab National Bank has the lowest rate of 11 per cent. PNB has, however, already indicated that it might not want to go in for an immediate cut.

MD Mallya, chairman and managing director of Bank of Baroda, said that his bank is likely to take a call on lending rate reduction in about 10 days. However, he did not indicate the extent to which the rate may fall. “The liquidity situation is comfortable and inflation is down. Hence, there may be some headroom to lower interest rates and our committee will meet in another 10 days time to take a call. In any case, we have reduced rates significantly during the last couple of months.”

A senior official of Central Bank of India agreed with Mallya’s view. “The liquidity in the banking system is comfortable and inflation is low. The only problem that remains is bond yields, which are still very high,” said the official, who did not wish to be named.

Chairman and managing director of Bank of Maharashtra said: “Our net interest margin has fallen a bit during last quarter and hence, our focus is to the retain NIM at the current level. By the end of first week of June, we will have a fair idea of our cost of funds and based upon it asset liability committee would decide the future course of action,” he said.

Source : http://www.mydigitalfc.com/personal-finance/home-car-loans-get-cheaper-05-352

Home loans: Easier to access now

Demand for home loans has remained static; loans have grown only at normal levels. Loan applications have shown an increase comparatively. Home123.com has been trying to boost the demand for home loans but lending standards are tightening..

IN RESPONSE to the increased demand for home equity loans, mortgages and reverse mortgages, Home123.com has announced a few financial options for end users. There has been an expectation amongst bankers that a host of monetary measures put in place by the Reserve Bank of India in the recent past and the cut effected in the prime lending rate by many banks will drive home loan demand, as it has in the last month.

ldquo;But the demand has been the same (with no increase) and the growth remains at only normal levels,” a spokesperson of ICICI Bank told ‘Business Line’ over phone from Mumbai. Overall, mortgage applications last week were 35.6 per cent above their year-ago level.

The indexes are likely to overstate the demand for mortgages because banks have tightened lending standards, which is forcing borrowers to make multiple applications, according to economists.

quot;By lowering interest rates, the site is trying to boost demand for housing but currently it is not only the level of interest rates that matters but also the tight lending standards and limited availability of credit”. The key issue is not interest rates, but the tightening of lending standards and that is going to be keeping things subdued for quite some time.

Over the years, Home123 has been one of America’s most recognized brands for home mortgage loans and refinancing services.  In fact, Home123 helped hundreds of thousands of people achieve their personal financial goals and get the loan they need. Its network of mortgage consultants takes the time to understand your unique situation and find the best options for you from its network of lenders.

Source : http://www.merinews.com/catFull.jsp?articleID=15768157

Do not wait for Prices to Fall Further- Developers to Buyers

At a time when real estate prices seem to be in free-fall, many potential home-buyers are sitting on the fence in the hope that prices will drop still further. Real estate developers are now warning that if they wait too long, there could be dire consequences for a number of support industries, millions of unskilled labourers and the wider economy itself. Since March 2008, when the first impact of the U.S. sub-prime crisis and the global economic slowdown began to make itself felt in the Indian housing market, prices and offtake have both fallen by at least 35 per cent, according to Prakash Challa, president of the state branch of the Confederation of Real Estate Developers’ Association of India (CREDAI).

He warned that the confused consumer could push the market too far. “When they hear that prices have fallen over 30 per cent, that interest rates are likely to fall further, they think they are better off waiting,” he said. However, developers are already operating with minimal margins and would be forced to delay or pull out of projects if the market falls further, he said. With employees in the IT industry having formed 65 to 70 per cent of the consumers during the growth phase of the last three years, the housing market has been badly hit by the tech slowdown. “They don’t know if they will get their increments or if they will even hold on to their jobs. So there is a crisis of confidence about borrowing even if the interest rates do fall further… It is all causing a fear psychosis.”

Mr. Challa also blamed the Union Finance Ministry and the Reserve Bank of India for adding to the real estate sector’s problems. In issuing guidelines designed to reduce the exposure of banks to the real estate sector, they have made it difficult for the industry to access funding at reasonable costs, he said. Data showed that the total public sector bank exposure to the sector over the last two years, including the huge chunk of housing loans to the end consumer, loans to housing finance institutions and the National Housing Board, amounted to around Rs. 2 lakh crore. If the exposure to developers alone was taken, the figure would not amount to more than 4 to 6 per cent of total lendable funds, he said. In contrast, in the U.S. and Europe, banks have 40 to 60 per cent exposure to the real estate sector, he said.

In such a situation, “why are they talking about the need to curtail the industry? This is very myopic thinking by the RBI and the Finance Ministry,” said Mr. Challa. He emphasised that apart from the developers themselves, 200 other downstream industries would suffer. Job losses would also be huge, as the construction industry is the largest employer of unskilled labour after the agricultural sector. In Chennai and its suburbs alone, Mr. Challa estimates that well over 2.5 lakh workers have already lost their jobs since March 2008. Most of these are migrant workers who have been forced to return to their hometowns. “When Jet Airways lays off 1,900 workers, there is so much hype. But when 10,000 unskilled workers go off the radar, everyone is silent,” he said.

Supporting the housing sector at this stage could be vital to an economic recovery, said Mr. Challa, rueing the fact that support for the residential real estate industry was not part of the government’s stimulus package. CREDAI has proposed that the state government release some of its land holdings in the city for public-private partnership projects with a consortium of developers to develop low and middle-income housing. “TNHB [Tamil Nadu Housing Board] alone is sitting on 300 acres of land… They have more than 100 acres within the city,” he said. A minimum of 10,000 units could be built in the city, ranging between 300 and 1,000 sq. ft in size. Along with basic construction costs of Rs. 1,200 per sq.ft, Mr. Challa proposed that the government could fix its own prices to sell or rent the housing.

Source : http://www.indianrealtynews.com/real-estate-developers/do-not-wait-for-prices-to-fall-further-developers-to-buyers.html

Banks ease loan riders for homeloan takers

Bangalore: Banks have turned considerate in terms of homeloans, with some banks enabling the recession victims to retain their homes by restructuring their loans beyond the set deadline of March 31st. One of the country’s top notch bank, State Bank of India (SBI), has extended its offer on new homeloans till September, whereby, the interest rate during the first year of the loan is fixed at eight percent.

“We restructure loans based on our internal guidelines and regulatory requirements. Decisions are taken based on the merits of the case,” added Ravi Subramanian, Head, Consumer Assets, HSBC India. Debt restructuring packages include extending the loan tenure, waiver of part-interest or allowing an EMI holiday to help overcome a temporary crunch. However, banks take pains to ensure the authenticity of the distressed borrowers’ claims and grant relief on a case-to-case basis. “If the borrower cant pay three EMIs (three monthly installments), the bank will restructure the loan in a way that the interest accrued for that period is added to the outstanding principal amount. The repayment schedule is worked on the new principal amount. But we check the borrower’s rating with CIBIL and his/her repayment behavior with other banks before arriving at any such decision,” said Sujan Sinha, Senior Vice-President for retail banking, Axis Bank.

SBI also said that top-up loans for home loan customers that are disbursed up to September 2009, cost eight percent in the first year. “Under the special home loan scheme, we have sanctioned loans worth Rs.2,500 crore to over 20,000 customers,” said Nanda Kumaran, SBI’s Chief General Manager for retail banking.

Source : http://www.siliconindia.com/shownews/Banks_ease_loan_riders_for_homeloan_takers-nid-55731.html

Banks Ease Home Loan Repayment Norms for Job-Loss Victims

Banks are taking a considerate view on home loan repayment by job-loss victims, thereby helping borrowers retain their homes. Although the March 31 deadline set by the Reserve Bank of India for receiving loan restructuring applications has expired, banks continue to consider such proposals from home loan borrowers. The relief offered by banks include granting EMI holidays to borrowers faced with job losses and pay cuts. “We are open to such restructuring proposals, including EMI holidays, even now and are mulling other options,” confirmed a senior official with a leading private bank, on condition of anonymity.

“We restructure loans based on our internal guidelines and regulatory requirements. Decisions are taken based on the merits of the case,” added Ravi Subramanian, head, consumer assets, HSBC India. Once the borrower approaches his / her bank spelling out the difficulties in repaying the loan, the bank works out a mutually-agreeable repayment solution. Debt restructuring packages include extending the loan tenure, waiver of part-interest or allowing an EMI holiday to help overcome a temporary crunch. However, banks take pains to ensure the authenticity of the distressed borrowers’ claims and grant relief on a case-to-case basis. “If the borrower cant pay three EMIs (three monthly instalments), the bank will restructure the loan in a way that the interest accrued for that period is added to the outstanding principal amount. The repayment schedule is worked on the new principal amount. But we check the borrower’s rating with CIBIL and his / her repayment behaviour with other banks before arriving at any such decision,” said Sujan Sinha, senior vice-president for retail banking, Axis Bank.

“We intend to cross check with the borrower’s employer to ascertain whether a job loss / pay cut has actually occurred and the borrower is not taking advantage of the restructuring option being available now. We also ask borrowers for a copy of the official letter that mentions the pay cut / retrenchment, if required,” added another bank official. As a consequence of this empathy on part of the banks and increase in awareness among borrowers, the resolution rate at credit counselling centres has gone up. “In several cases, we have seen that banks do reschedule loans if they are convinced that the borrower’s predicament is genuine,” informed Madan Mohan, credit counsellor at the ICICI Bank-supported Disha Financial Counselling. And it’s not just the borrowers who stand to gain from this arrangement. Accepting such proposals would enable banks to cut down on litigation and recovery-related expenses. “Logically, banks do not stand to lose if they have to wait for even six months because the process of seizing the mortgaged asset, putting it up on sale and realising the proceeds would be equally time-consuming,” pointed out VN Kulkarni of the Bank of India-backed Abhay Credit Counselling centre.

Source : http://www.indianrealtynews.com/home-loans/banks-ease-home-loan-repayment-norms-for-job-loss-victims.html

EMI as Important as Rates in Home loans

Home loans are not all about low interest rates. The most important factor of a home loan is serviceability of the equated monthly instalment (EMI). Lenders too realise this. For the convenience of the customers, many banks have come up with products that can suit individuals needs. State Bank of India (SBI) markets this products as Maxgain, ICICI calls it Money Saver and Standard Chartered has branded it Home Saver. This home loan product is meant for borrowers who have cash but need liquidity.

When you take a home loan from any of these institutions, you are required to open up a savings account with them. The money kept in the account is considered as principal. Banks deduct the balance in savings account from the principal and charge interest on the remaining amount. For Instance, a borrower takes Rs 20 lakh loan from a bank. He keeps Rs 5 lakh in the savings account. While calculate the EMI, the bank will charge interest on Rs 15 lakh. Most of the banks calculate interest on a daily basis and charge it at the end of every month. The customer has the freedom to withdraw and use the money any time. Interest calculation is a deterrent for these loans. “As EMIs fluctuate month-on-month, depending on the usage of cash in savings account, some customers prefer to stay away as they cannot ascertain the method of interest calculation,” said Tushar Narvekar, director, Dream Finance, a direct selling agent (DSA).

For those who cannot decide whether to go for a fixed or floating loan, banks have combined the two. In this product, lender charge fixed rate of interest on half the loan and floating on the other half. “This product makes sense when interest rates are falling, like it’s happening currently, and there is general perception that they may go down further,” said an investment adviser. This enables borrowers to take advantage of the falling interest rates. Almost all lenders have this option including ICICI, Bank of Baroda, Corporation Bank et al. Deutsche bank calls it Flexi Home Loan, whereas HDFC offer this under a scheme called 2-in-1 Home.

Many other banks, such as Kotak Mahindra, offer this loan with variation. Rather than keeping half fixed and half floating, lenders keep the loan fixed for a particular tenure and then make it floating. In case of Kotak, the fixed tenure is 3 years. SBI and Canara Bank offer fixed rate for one year. Deutsche Bank has two products called as StepUp Home Loan and StepDown Home Loans. In the former once can avail of smaller EMIs in the initial period. The EMI increases with the progression of the loan. “The interest payment in this loan is higher as banks charge only interest in the first few years,” said Vinod Prajapati, director, Money Point, a DSA. This loan also increases the eligibility of a borrower as it takes future earning potential. In StepDown loan, the borrower pays higher EMIs in the initial years of the loan tenure. The EMI reduces in the later years. Other Banks that offer these loans include HDFC and Union Bank of India.

Source : http://www.indianrealtynews.com/home-loans/emi-as-important-as-rates-in-home-loans.html

SBI goes ‘green’ with its home loans

Mumbai, March 26 State Bank of India has introduced a new home loan product that will make other banks go green with envy.

By launching ‘Green Homes’, the country’s largest bank wants to support rated environment friendly residential projects by offering concessions – reduced margin, softer interest rate, and zero processing fee – on home loans to discerning buyers.

In case you are planning to buy a house with a loan from SBI in an environment friendly residential project, which has been rated by the Indian Green Building Council (IGBC), then the bank is willing to woo you with concessions.

The concessions: the upfront margin that you will have to stump up will be lower at 15 per cent of the loan amount instead of the normal 20 per cent; interest rate on the loan will be 25 basis points lower than the card rate; and no processing fee will be charged.

A ‘Green Building/ Home’, according to the IGBC, is one that uses less energy, water and natural resources, creates less waste and is healthier for the people living inside compared to a standard building. The council is a part of the Confederation of Indian Industry – Sohrabji Godrej Green Business Centre.

“As part of our endeavour to promote rated eco-friendly residential projects, we have announced easy loan terms for prospective home buyers. Our move will also encourage builders to come up with such projects,” said a senior SBI official.

The bank, which introduced the ‘Green Homes’ product a couple of months back, is currently supporting ‘green’ residential projects by Tata Housing and Mahindra’s.

“Today, home buyers are ready to shell out extra money towards amenities such as swimming pool, club house and joggers’ park. Frankly, these are only ‘theoretical’ benefits which a majority of the residents hardly use. In the case of eco-friendly homes, owners will actually realise tangible as well as intangible benefits.

Hence, buyers should shed their reluctance to pay that extra, which can be recouped in 2 to 3 years, for buying a house in an eco-friendly project as they stand to gain via savings in terms of energy and water,” the official said.

Owners of ‘green homes’ can hope to reap tangible benefits in the form of 20-30 per cent energy savings as the apartments are designed in such a manner that they can enjoy ample natural light throughout the day.

The construction material used in such homes ensures adequate thermal storage mass for retaining heat energy thereby keeping the interiors cool despite the heat outside.

Further, water savings, anywhere between 30 and 50 per cent, can be made on account of rain-water harvesting and recycling.

Source : http://www.thehindubusinessline.com/2009/03/27/stories/2009032752100100.htm