RERA, GST pull home loan growth down 32.7% YoY in Apr-Oct ’17

Low buyer's sentiments in the real estate sector despite a dip in the home loan interest rates has led a sharp decline in home loan growth.

According to the Centre for Monitoring Indian Economy (CMIE), home loan growth in April-October fell down by 32.7 percent from a year ago, one of the biggest declines in the last five years. In 2016, home loan growth was down 4.27 percent, while in 2015, it was up 26.89 percent.

Over the past two years, the interest rate on home loans has come down by 150-200 basis points, said the report. A basis point is one-hundredth of a percentage point.

Major financial institutions have lowered their interest rates. In early November, the State Bank of India announced its plans to offer the cheapest home loans by implementing a five-basis point reduction in margin cost based lending rate (MCLR rates). The country’s largest lender bought down the rate to 8.30 percent.

Many developers believe that weak consumer sentiment stems from the impact of three major events or reforms made by the government to either improve India's economic growth, fight black money and or simplify tax.

Home Loan: Getting an owned house is not difficult further

Most of us cannot afford to build our own homes. This may be due to scarce financial resources or unavailability of land or the absence of a desire to live in an owned home. Whatever the reason may be, there is no denying the fact that an owned home is always better than a rented accommodation since it saves valuable finances and is a valuable long-term investment by all standards.
In context of the Indian housing market, it can be clearly said that the home loan borrowers are happy customers these days, all thanks to the customer-friendly terms, conditions and plans. The reduced home loan EMIs due to intensified competition have opened the doors of personal prosperity and asset accumulation for many home loan aspirants these days.
Due to the emergence of new market players in the Indian housing loan market, the interests of home loan aspirants have blossomed to a considerable extent. There is a remarkable difference in the Indian loan market of yesteryears and today. The changing market trends and attitudes of the financial institutions as well as the other lenders have bolstered the overall growth and prosperity of the Indian housing loan market.
The industry and customer-friendly guidelines issued by the Reserve Bank of India (RBI) have also strengthened the market norms and attitude. If we have a close look at the home loan EMIs rates for the last few years, we can easily conclude that the reformative measures introduced by many financial institutions and the Indian government in all these years have contributed significantly in an attempt to grab the attention of home loan aspirants. The home loan EMIs has helped the middle and low-class income earners to start thinking about their own homes. This is evident from the fact that in the last two years, the majority of customers asking and/or availing the home loans belonged to these economic classes. The option of making an equated monthly instalment rather than making a lump-sum payment obviously encourage more home loan aspirants.
Some of the most eminent Indian financial institutions such as State Bank of India, HDFC, ICICI, Standard Chartered and Punjab National Bank etc. have opened their hands to greet the home loan aspirants. The plans and policies of these banks have motivated the working class of the country to strive for an owned home rather than living the life of misery in rented or PG accommodation.
A prospective home loan borrower must consider certain things before starting the search for a lender. He must be ready to spend some of his valuable time in understanding the present home loan market trends as that will help him to get effective bargains without losing his focus. The advice of a financial expert, who is dealing in the arena of home loans, is highly recommended since he can offer a complete insight into the complexities of the housing loan segment.
Home loan in India can be taken by any individual who is of the age of 18 years and holds the citizenship of India. Some of the banks are also offering the home loans to NRIs, subject to fulfilment of certain pre-defined conditions. The loan applicant must have a regular source of income and preferably must be enjoying a good credit rating. He must have a valid identity and residence proof such as Government ID card, PAN card, passport, voter ID card and bank statement with address etc. The loan formalities are quite easy, making it pretty easy for the loan aspirants to obtain such loans.
Thus, it can be easily said that the reducing home loan EMIs have surely helped the Indian masses to think beyond the self-defined limits.

The accurate Calculator Tools to Know Your Home Loan Eligibility

Every couple dreams of owning a pleasant innovative house. Getting the house is however much more difficult than dreaming about one. You would first need to obtain the correct home loan that would suit you. A home loan calculator could greatly help you in picking out the accurate type of home loan for you.
There are so many options when it comes to option out a home loan. You are jump to realize this if you do a simple online search about home loans. You would also see that there are many websites with home loan calculators. However, some of these devices could have certain advantages over others like it. Some home loan calculators could be more accurate and could be more comprehensive than others. In order to get a correct and realistic estimate regarding your home loan, it's essential that the device you use for this purpose functions properly.
You could use various home loan calculators in different websites to find out from where you would be able to obtain your low interest Home Loan Rates. By comparing the different results that you get, you could get an understanding about this. However keep in mind that home loan calculators, even the most sophisticated ones, would only give a rough idea of the kind of home loan that you would be able to get. Other matters need to be taken into account so home loan calculators should not be your one and only guide when obtaining a home loan.
You can find the maximum amount that you could borrow, the maximum amount that you can afford and the rate of basic interest that you could get, through the use of a home loan calculator. Some of these devices have other helpful functions, like providing a list of mortgage brokers and providing various comparison tools. This could greatly help you in getting an idea about the kind of home loan that would suit you.
In order to get such information from a calculator home loan, you may have to enter information regarding your income, the rate that you prefer, the value of the property in question and the period of the home loan. Criteria could change at least a little bit between different home loan calculators but the basic questions asked would probably not vary all that much.
If you do have any ideas of getting a home loan just find a good home loan calculator and resolve any doubts that you might have.

Teaser rates are coming to end in March

Home Loan and auto loan customers will have to shell out more with several public sector banks including the State Bank of India, Punjab National Bank and Bank of India deciding to end the concessional or limited period loan regime, commonly called teaser rates.
The public sector banks, which are offering low interest rates for the initial period of the loan to attract new customers, have decided not to extend the validity of their schemes beyond March.
In certain cases, the schemes would be discontinued during the course of this month itself. The country’s largest lender banks chairman OP Bhatt (State Bank) had said in recent times that special home and Car loan schemes would continue only till the end of March.
The SBI has been trying to attract more customers by offering home and auto loans as low as 8 per cent with a limited period offer. As part of the special scheme under ‘My home campaign,’ the SBI home loan offering (up to Rs 5 lakh) at 8 per cent interest rate during the first five years of a 10-year loan.
For loans above Rs 5 lakh and up to Rs 50 lakh, the home loan interest rate has been fixed at 8 per cent during the first year and 8.5 per cent during second and third years.
Bank of India executive director M Narendra said, “our scheme is valid till February. We may not continue the scheme post-February.”
The scheme, he added, was launched for a limited period and the product has served the purpose.

RBI sees anxious about home loan rates

The perform among commercial banks of attract customers with beneficial interest rates on housing loans only to convert it into floating rates later is a cause for concern, Reserve Bank of India Deputy Governor Usha Thorat said Tuesday.
"In the area of housing loan, teaser rates are increasingly being offered which is a cause for concern," said Thorat at a banking conclave in Mumbai.
"I hope banks are ensuring that borrowers are well aware of the implications of such rates and the appraisal takes into account repaying capacity of the borrowers when the rates become normal."
RBI’s concern can perhaps be traced to the fact that the genesis of the mortgage crisis in the US lay in home loan extended to borrowers who struggled to repay. These loans, popularly known as sub-prime loans because they were given to people in lower income groups, included so-called adjustable rate mortgages where the repayment is low in the initial months with installments rising in subsequent months, somewhat similar to teaser rates.
Lenders in India, however, say there is no cause for concern as far as quality of lending is concerned since repayment capacity is assessed based on the overall liability and not the first year’s rate. Many leading lenders, including the State Bank of India (SBI), ICICI Bank, Canara Bank, Punjab National Bank and Housing Development Finance Corporation (HDFC), have recently introduced such special offers to attract borrowers at a time when demand for loans from individuals and industries has been tepid.
The shift from lower Home loan interest rates to floating rates has often resulted in the monthly installments of borrowers to shoot up by as much as 50 per cent, along with the risk of the tenure of repayment also getting extended by several years.
Major housing loan providers including State Bank of India, which controls about 25 percent of the total loans and deposits of the country, and top private institutions like ICICI Bank and HDFC have been offering such teaser interest rates.

25bps BPLR cuts by HDFC Bank

HDFC Bank, The country's second largest private sector lender slashed level prime lending rate (BPLR) by 25 basis points to 15.75% per annum with effect from July 20. A senior bank official said the HDFC bank has cut the lending rate as liquidity condition has improved substantially in the last couple of months. The bank had also reduced its fixed deposits rates effective from June 19 by half a percentage point, indicative of better liquidity circumstances.

This was the second cut in BPLR by the bank, In the past six months. in total, it has cut its BPLR by 75 basis points since December 2008. This rate cut shows that easy liquidity condition persist despite government has increased borrowing target in the first quarter to 2.97 lakh crore. Earlier, State Bank of India and ICICI Bank had expressed apprehension that huge government borrowing requirements may push the interest rates up.

On the other hand, this BPLR cut by HDFC Bank will not affect the lending rates of the bank much as it gives only 10% to 15% of the total loan at the rates linked to BPLR. All the retail loans like personal loans and auto loans are not linked to BPLR and are offered at fixed Deposits rate. So, this cut in BPLR will not benefit existing players.

However, some of the Business loans are linked to the benchmark rate. As the BPLR has lost its relevance in the changed scenario, RBI had constituted a six-member working group last month to review the BPLR system and suggest a mechanism for pricing of floating rate loans, a move that will improve transparency in fixation of home loan interest rates on housing loans by banks.