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Home Loan Rates In Rs 20-30L Bracket To Fall To Lower Slab
Posted by Pradeep Sadanapalli | May 3, 2008 | 364 views
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Loading ...If you are planning to take a home loan for Rs 30 lakh, look forward to lower interest rates. Home loan rates for loans of Rs 20-30 lakh are set to soften, bankers said after a meeting with finance minister P Chidambaram on Thursday.
Courtesy lower provisioning requirements for home loans up to Rs 30 lakh as announced by RBI in its monetary review, bankers said the benefit will be extended to new customers and existing customers on floating rate. Nearly 85% customers are in up to Rs 30 lakh category. In the total home loan portfolio, 40% are on fixed rate.
Mr Chidambaram said, “A higher credit flow for loans up to Rs 30 lakh can be expected without impacting the interest rates.” Now, banks have greater freedom to lend up to Rs 50 lakh, he added. Home loans up to Rs 20 lakh are charged 9.25-9.75% rate, depending on the tenure. Loans over Rs 20 lakh are priced 50-75 basis points higher. Following the change, loans of Rs 20-30 lakh will be charged at par with those below Rs 20 lakh, but there will be no change in interest rates for loans below the threshold.
RBI has reduced the risk weight — the amount of capital set aside for a loan — on home loans above Rs 20 lakh and up to Rs 30 lakh to 50% from 100%. Lower provisioning will reduce the bank’s cost of lending and, hence, bankers will take a call on passing the benefits to borrowers. The effective capital adequacy ratio for loans up to Rs 30 lakh will come down to half, which means banks have to park less funds for provisioning. Further, RBI has allowed urban cooperative banks to lend up to Rs 50 lakh in tier-II cities for housing. In May 2007, RBI had reduced the risk weight on housing loans for up to Rs 20 lakh from 75% to 50%. At present, home loans up to Rs 20 lakh qualify as priority sector loans.
Rising home loan rates have led to a slowdown in the growth of loans over the past year. The home loan portfolio of banks grew just 12% between April 2007 and February 15, 2008 (Rs 26,930 crore) compared to 25.8% growth (Rs 46,019 crore) in the corresponding period of the previous year. Loans to individuals for housing grew 16.44% to touch Rs 1,48,489 crore in March 2008 against Rs 1,27,522 crore a year ago.
SOURCES:
Economic Times
Topics: Property Matters, Finance, Real Estate |
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