Home loan rate cuts by key lenders to help push housing sales momentum further – ET RealEstate

The reduction in home loan interest rates to the record-low level by leading financiers including the State Bank of India (SBI), Housing Development Finance Corporation (HDFC), ICICI Bank and Kotak Mahindra Bank is expected to boost the current housing sales momentum further.

The country’s largest private mortgage lender HDFC has reduced the interest rate on its home loans to 6.75% from 6.8%. This reduction in home loan rate was announced just days after banks like the State Bank of India (SBI) and Kotak Mahindra Bank announced rate cuts.

Realty developers believe the reduction in home loan rates is expected to push housing demand further.

“The benign interest rates environment will continue for some time and it is unlikely that interest rates will fall further from the current levels. For the next few days, the buyers can swoop in on good deals on the back of rock-bottom interest rates on home loans, stamp duty relaxation, offers and the availability of choices from good developers. We can already see that the demand for residential properties has picked up now as people are beginning to believe that this is the best time to buy a property,” said Pritam Chivukula, Secretary, CREDAI-MCHI and Co-Founder, Tridhaatu Realty.

The banks are competing to grab the home loan customers before the fiscal year ends and the reduction in home loan interest rates have extended the best buying opportunity for the homebuyers.

“There is already a growing desire of owning a home as consumers look at it as a necessity in this unprecedented time of the COVID-19 pandemic. With the last few days left to avail the stamp duty benefit, there is a stiff competition amongst the financial institutions to provide the consumers with the best home loan interest rates…These factors are also proving to help spur the real estate demand that was temporarily hit as a result of the pandemic,” said Ashok Mohanani – President, NAREDCO Maharashtra.

Realty industry experts have been voicing their demand that banks need to pass on the benefits of the reduced repo rates to consumers. The real estate sector has benefited immensely from the record low home loan rates, apart from the temporary reduction in stamp duty charges in key states.

“The reduction in home loan rates by leading banks is going to help the demand side immensely. Currently, the all-time low, sub-7% interest rates are encouraging consumers to proceed with their purchase and quickly close their transactions. Low interest rates also help enhance eligibility for home buyers thereby bringing more customers into the marketplace,” said Jayesh Rathod, Executive Director, The Guardians Real Estate Advisory.

According to Rathod, a low interest rate regime is bound to catapult economic growth in the country as a result of enhanced consumption. The low interest rates coupled with negligible or nil transaction cost will augur well for ready-to-move-in homes and the affordable housing industry.

In the last few days, SBI has offered an interest concession of up to 70 bps with interest rates starting from 6.7% onwards for a limited period offer till March end. Kotak Mahindra Bank also on Monday announced a 0.10 percentage point cut in its home loan rates for a limited period. Customers will be able to avail home loans for 6.65% till March 31 as part of a special offer after the rate reduction.



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Lower home loan interest rates to continue for next 12 months: Keki Mistry, HDFC – ET RealEstate

NEW DELHI: Calling the existing home loan rates the lowest in the last four decades, Keki Mistry, vice chairman and CEO, HDFC has predicted that the the lower interest rates regime will continue for another six to twelve months that will give the best home buying opportunity for the home buyers.

“The home loan rates have been the lowest in the last four decades. For the next six to 12 months, the benign interest rates environment will continue. The growth in the economy and the real estate has been sharp.

The factors like the RBI infusing much needed liquidity into the sector, various concessions given by the Government and the developers like the stamp duty relaxations have extended the best buying opportunity for the homebuyers. The trend will continue with the lowest interest rates regime,” he added.

Mistry cautioned that the RBI may face some pressure owing to the higher inflation that will reduce its ability to cut the rates further. He also observed that the banks are now distinguishing between the strong and weak developers for lending, hence improving the quality of balance sheets, avoiding over-leveraging and staying well-capitalised will help the developers float well in the market.

He also predicted that the investments in creating co-working spaces will grow in the near future and more consolidation will happen at the projects level.

He was speaking at the NAREDCO‘s ‘Real Estate and Infrastructure Investors’ Summit (REIIS) – 2020 in association with APREA.



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HDFC extends funding of Rs 200 crore to DivyaSree’s Bengaluru commercial project – ET RealEstate

MUMBAI: Housing Development Finance Corp has extended Rs 200 crore funding to realty developer DivyaSree Infrastructure Projects for construction of a part of the commercial project Technopolis in Bengaluru, said two persons with direct knowledge of the development.

The non-banking finance company will charge below 11% interest for the loan with a total tenure of 48 months.

The construction finance loan is expected to be repaid in one single bullet payment of Rs 200 crore at the end of 48 month from the date of first disbursement or earlier at the option to be exercised by HDFC.

The loan will be serviced through monthly interest during this period.

The Bengaluru-based developer will be using the funds for construction of nearly 1 million sq ft development spread over 10 floors of Technopolis project.

The office building has been designed and being constructed as a built-to-suit project for a specific customer.

“As part of the agreement, the borrower has created an exclusive mortgage and charge over the said property in favor of HDFC,” said one of the persons mentioned above.

Technopolis is a 68-acre mixed-use project with a total development potential of 5.5 million sq ft, including commercial office spaces, residential villas and luxury apartments.

The under construction office spaces in this project are being developed as built-to-suit spaces for tenants like Xerox, Deloitte, Thomson Reuters, and Landmark Group totaling around 2.5 million sq ft.

ET’s email queries to HDFC remained unanswered until the time of going to press. DivyaSree’s Managing Director Bhaskar Raju declined to comment for the story.

Last year, private equity player Kotak Investment Advisors announced a $400 million fund in partnership with DivyaSree Developers to build and acquire commercial office assets across the country.

The developer has developed over 19 million sq ft office spaces since 2005 and has 6 million sq ft offices under construction across Bengaluru, Hyderabad and Chennai. It counts Cisco, Dell, Oracle, Google, Accenture, IBM, Wells Fargo, Cognizant, UBS among its clients.



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High home loan demand triggers interest rate war – ET RealEstate

̥MUMBAI: A surge in demand for home loans in October has triggered a rate war. Kotak Bank is now offering home loans at 6.75% — the second reduction in less than a month. A host of banks are offering loans at 6.8% to 7%, resulting in the spread between these and government bonds narrowing down to 80 basis points (100bps = 1 percentage point).

Banks say that home loans are a safe bet and this is the only segment growing in double digits. Demand has been triggered because of work from home (WFH) needs, discounts by builders, reduction in stamp duty rates and interest rates being at an all-time low. The frequent changes in pricing among lenders seem to indicate that a rate war is brewing as the banks compete to grow the home loan book, which is seen as the safest category of loans.

In the last few days, Bank of Baroda and Union Bank of India had slashed their home loans to 6.8% and 6.9%. SBI recently announced discounts of up to 25bps on loans above Rs 75 lakh for customers applying from its app Yono. HDFC also offers loans at 6.9%.

Speaking to TOI, Kotak Bank group president (consumer banking) Shanti Ekambaram said that the lender was seeing an increase in demand for housing as the shift to WFH had resulted in homeowners looking for larger accommodation. Also, developers and state governments were offering additional incentives to home buyers.

“We are seeing demand back at pre-Covid levels and we want to open our doors to home loan customers as part of our acquisition strategy for long-term customers,” she said. According to Ekambaram, home loans were the best asset class, and offering the lowest rate enabled the bank to attract top quality customers.

While announcing the results, Punjab National Bank MD & CEO S S Mallikarjuna Rao said that home loans have gained momentum and are heading to pre-Covid levels. Home loans have been a major driver of credit, growing nearly 10% on a year-on-year basis to Rs 84,000 crore.
High home loan demand triggers interest rate warFor HDFC, home loan disbursements in October 2020 have been the second-highest in any month in the institution’s history. Mumbai saw the highest demand followed by Delhi and Bengaluru, while Hyderabad and Chennai were a bit slow. “The demand that we are seeing is largely transactions that were initiated post-Covid and is not pent-up demand. We hope that this will be sustained,” said HDFC VC and CEO Keki Mistry.

Ekambaram says that the renewed demand for housing is an opportunity for Kotak Bank, which was not part of the top-five home loan lenders. The bank now offers home loans at 6.75% for salaried borrowers with a Cibil score of over 750 and loan-to-value of 80% and below. For self-employed borrowers, the rate is 6.85%, all other conditions being similar. The same rates will be available for borrowers seeking balance transfers.



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