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.

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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.

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Uttar Pradesh issues moratorium on housing instalments – ET RealEstate

LUCKNOW: Wracked by the Covid crisis, home buyers have much to cheer with the state government providing a sixmonth moratorium on payment of instalments for housing property bought from a development authority or UP Housing and Development Board.

The state housing and urban planning department has decided to waive penal interest on allottees, who could not pay instalments between March 1 and August 31 due to the pandemic. In a directive to development authorities and housing board, principal secretary (housing and urban planning), Deepak Kumar, said, the condition would apply to allottees who pay instalments by September 30.

House allottees in UP would be required to pay normal interest

Kumar said, the decision was taken in sync with Reserve Bank of India guidelines and economic relief packages announced by the Centre. However, allottees would be required to pay normal interest levied by development authorities and housing board. The interest ranges between 9-12%, depending on type of housing property.

Housing department officials said, the waiver comes in backdrop of a similar moratorium given by banks because of the pandemic. “This could be beneficial to those who could not pay dues due to movement curbs during the lockdown. They would not be charged a penal interest on non-payment of instalment, but normal interest will be applicable,” said a senior official in the housing department.

Also, the state government would not give rebate on payment of instalments within 45-60 days if the period falls between March 1 and August 31. The arrangement, the order said, should not be considered as a concession or change in conditions of agreement. “The previous arrangement would continue,” the order said.

The sop comes in midst of a slump in property purchase by potential home buyers even as the demand for housing units registered a significant drop in wake of the lockdown and dip in income levels. Real estate experts said, the real estate sector has been bruised by of the sharp decline in demand.

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Union Bank of India reduces MCLR by 20 bps across tenors – ET RealEstate

MUMBAI: State-run Union Bank of India on Friday announced reduction in its marginal cost of funds-based lending rate (MCLR) by 20 basis points across tenors. The new rates are applicable from July 11.

The revised one-year MCLR stands at 7.40 per cent against 7.60 per cent earlier, the bank said in a release.

Three-month and six-month MCLRs have been cut to 7.10 per cent and 7.25 per cent, respectively.

This is the thirteenth consecutive rate cut by the lender since July last year.

The country’s largest lender State Bank of India has also reduced its MCLR by 5-10 basis points (bps) for shorter tenors, effective Friday.

Another state-run Indian Overseas Bank (IOB) has cut its MCLR by up to 25 bps across tenors.

Earlier this week, Canara Bank and Bank of Maharashtra (BoM) also reduced their MCLRs by 10 bps and 20 bps, respectively across all tenors.

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