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.



Source link

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.



Source link

Banks plan EMI deferment for home loan restructuring – ET RealEstate

MUMBAI: Lenders, including SBI, are working on restructuring options for home loans where the overall tenure of the loan does not extend by more than two years, even after relaxing the repayment schedule.

The options include allowing EMI deferment for a few months in cases where the borrower has suffered total loss of income or allowing step-up EMIs, with a lower payout for a couple of years to make up for a reduction in salary or loss of income due to the pandemic.

According to sources, the KV Kamath committee will not look into retail and home loan restructuring and banks will draw up their own proposal which they will submit to their boards by early next month after getting an idea of the number of borrowers facing stress.

Bankers are keen to restructure loans in order to avoid having to classify defaulters as non-performing assets. Also, banks say this isn’t the right time to enforce security and attach assets. Though RBI has let banks extend loan tenure by two years, bankers say that they cannot provide a two-year moratorium.

Anyone with a 15-year loan who has availed moratorium for six months will already see their overall loan tenure extend by 14 months. This means that at most banks can defer EMI by a few months. The exact relaxation would depend on the interest rate that the borrower will be paying. While home loan rates have come down to below 7%, banks say that it will be difficult to provide their best rates to restructured loans as lenders have to make an additional provision of 10% on restructured loans. This will increase costs by up to 30 basis points.

According to the terms of reference of RBI’s appointment the Kamath committee is expected to submit its report by mid-September. Bankers expect the committee to give various parameters for restructuring including the maximum debt-equity ratio to be allowed, the permissible leverage for each sector like hospitality, aviation, real estate, or construction.

The committee would also decide under what circumstances can conversion of debt to equity would be allowed. In addition, every individual corporate loan, where bank exposure is over Rs 1,500 crore would be reviewed by the committee to consider restructuring.



Source link

LIC Housing Finance reduces home loan rate to 6.90% – ET RealEstate

MUMBAI: Mortgage financier LIC Housing Finance Ltd (LICHFL) on Wednesday said it has reduced interest rate to an all-time low of 6.90 per cent for new home loan borrowers having Cibil score of 700 and above. LICHFL in a statement said the rate of interest for home loans up to Rs 50 lakh starts from 6.90 per cent for borrowers with CIBIL score of 700 and above.

For a similar score, the rate of interest is 7 per cent onwards for a loan above Rs 50 lakh, it said.

“Home loan interest rates are at an all-time low for the company and thereby resulting in low EMI payment. Attractive price points and affordable EMI will aid in addressing the demand side for buying homes,” LICHFL Managing Director and CEO Siddhartha Mohanty said.

Through this product, the company is trying to create demand, he told reporters.

In April, the home financier had cut its home loan rates to 7.5 per cent for new home buyers having a Cibil score of 800 and above.

Mohanty said there has been a softening of cost of funds after reduction in repo rates by RBI in recent months. The company’s cost of fund currently stands at around 5.6 per cent.

He said below 25 per cent of the company’s total book is under moratorium. Of its construction finance loan book of Rs 13,000 crore, around Rs 8,500-9,000 crore is under moratorium.

The housing finance company also launched a special home loan product, Griha Varishtha, for pensioners. The tenure is till attainment of 80 years of age or maximum up to 30 years, whichever is earlier.

This specially designed product caters to retired or serving employees of PSU insurers, Central/state government, railways, defence, banks, among others, entitled to pension under Defined Benefit Pension Scheme.

For higher loan eligibility, the applicant can also jointly apply with their earning children.

Additional benefits under this scheme include six EMI waiver for customers going for ready to move units or 48 months moratorium period for purchase of under-construction units.



Source link