India recovers from car sales slowdown in next year

As per the recent study conducted by the research firm Deloitte, the slowing down car sales in the Indian market will bounce back again in year 2012, as the car loan interest rates and inflations in the country are expected to decrease in the next year.
In its report – Driving through BRIC markets, Lessons for the Indian market – Deloitte said that a number of poor microeconomic factors have affected the growth of the passenger vehicle segment in recent months including the likes of skyrocketing fuel prices, high auto loan interest rates and restrained growth of real disposable income.
Since the deregulation in year 2010, there has been a jump of 34 percent in the fuel prices in the Indian market. On the other hand, the interest rates on new car loan have surged to 13 -14 percent.
As per a report given by Mr. Kumar Kandaswami, "The current slowdown is not here to stay as the fundamentals of car sales growth namely urbanization and car density are still very attractive."
The report further elaborates, "Car sales have declined, and registering de-growth since July 2011, compared with the previous year and is not expected to recover unless the macroeconomic factors become attractive. In FY 2011-12, car sales are expected to grow by a meager 2-3 per cent against 30 per cent in 2010."

PSU Banks approve credit proposals up to 400 crore

The government has quadrupled the limits on loans that a bank's internal committee can approve, a move that could quicken credit clearance at 26 state-run banks, including the Bank of Baroda and PNB.
The government has directed banks to set up a credit approval committee - comprising chairman, executive directors and three chief general managers who handle credit, finance and risk management functions. This group can approve credit proposals up to 400 crore. Currently, any loan above 100 crore has to be vetted by the management committee of the board, which met once a month, or 20 days.
"The new initiative will help in facilitating credit disbursement at a much faster pace," said KR Kamath, CMD of PNB. "This would take care of a substantial part of the lending business."
The chairman, through a credit approval committee, can now lend up to 400 crore to an individual borrower. Under the old regime, a management committee of the board, which included a RBI nominee and two independent directors appointed by rotation, the bank's chairman and managing director and executive directors, took these decisions.
This limit is applicable on Category 'A' banks with a business of 3 lakh crore, while smaller public sector banks can use the same structure to approve loans up to 250 crore. If a loan under consideration is higher than these limits, it would be taken to the management board.
"The government decision would enable the management to take operational decision and the board could focus on policy matters," said S Ravi, shareholder director at Union Bank.
Over the past few years, the project size has increased many folds and the restriction of 100 crore was seriously affecting the lending business, said one of the person quoted above. "At least 60-70% of the loan size is above 100 crore, which used to be referred to MCB. Now less than 10% cases would be referred to MCB," he added.
"Though a credit approval committee has replaced the board's management committee, the two are significantly different. The MCB has outside members such as RBI nominee and independent directors; the new committee comprises two EDs and chief general managers, who report to the CMD," said another retired chief of a nationalised bank.
SBI, the biggest, already follows such a practice where loans of up to 500 crore are approved by such a committee and loans bigger than this are referred to the board's committee.

Demand of Car loan Increased in Nov 2011

The unyielding attack on interest rates in a bid to rein in runaway prices is elastic results: the demand for vehicle loans has come down. The growth rate of Car loan volumes have almost halved so far in 2011-12 compared to the same period last fiscal,RBI.
While vehicle loans disbursed by banks in April to October 2010 rose by 13%, in the current year the pace has come down to just 7% this fiscal year. Interestingly, apart from the plunging auto sales, another factor for this decline is a rise in cash-down purchases.
Among car and utility vehicle buyers, customers opting for vehicle finance went down from 80-84% to 70-74%, according to Pawan Goenka, president, Mahindra & Mahindra.
“Another trend is people increasing their down payment. The LTV (loan-to-value) ratio came down from 85% to 75%, in some cases 50:50,” he said. The increased cost of finance added up to the overall cost of vehicles, prompting many aspiring car buyers to postpone their purchases.
“There is a decline in demand for vehicles and it impacted car loan as well. Hike in interest rate also is a crucial factor,” said Jairam Sridharan, senior vice president and head of consumer lending, Axis Bank. Auto loans account for 13% of Axis Bank’s retail lending.
RBI has hiked the repo rate 13 times by a cumulative 3.5 percentage points since March.
Maruti still lags, but auto sales rise 7% in November
After four months of decline, domestic car sales in India grew by 7% in November despite market leader Maruti, which controls almost half of the industry volumes, posting a near-20% decline in sales during the month.
Second-placed Hyundai Motor, homegrown Tata Motors, Toyota, General Motors, Ford and Volkswagen all grew handsomely during the month, but industry body Society of Indian Automobile Manufacturers (SIAM) warned that December could see sales drop again and a full revival will only happen in 2012.
“Sales would fall again in December though it would not be as drastic as in the last four months,” said Sugato Sen, director, SIAM. “Sales growth would only happen from January onwards but even then it would not be enough to reach our target of 2-4% for the entire fiscal.”
So far this year, car sales have declined by 3.5% as a mix of high interest rates, fuel prices and runaway inflation have dampened consumer sentiment.
There is however, no hint of a slowdown in two-wheeler sales in the country, which grew by over 25% during the month. The segment that accounts for a lion's share of overall industry volumes, ensured that total automobile sales in the country grew by 22% during the month at 1,489,714 units.

SBI won't make unique home-loan provisioning

With the finance ministry’s economic survey backing State Bank of India’s (SBI) controversial yet popular home loan scheme, bank chairman O P Bhatt said SBI will not have to make any special provisioning for such loans.
SBI home loans, which offer a lower interest rate in the initial years and rate increases in the later years, were termed teaser loans by the Reserve Bank of India (RBI). RBI is not comfortable with banks offering such products and had increased the standard provisioning requirement for such loans by five times, to two per cent in October.
The increase in provisioning would have put a huge burden on SBI, as most of its home loans were disbursed after February 2009, when the scheme was launched. After RBI increased the provisioning requirement, SBI has tweaked the scheme by offering a fixed discount in the initial years, instead of charging a fixed rate. All floating-rate home loans will be linked to the bank’s base rate.
“The economic survey has said it is far better than I ever said it before. They have sort of reinforced and reiterated what we have said and I am glad that it has happened. We did not ask for an exception, we are totally compliant with what the regulator wants,” Bhatt said today.
Bhatt said SBI’s loans cannot be termed as teaser loans, a view supported by the finance ministry, and hence no extra provisioning is required.
“It is not about compliance, it is about clarity on the nature of the product that RBI labelled teaser loans. The government has called it terraced loans. According to the definition by RBI, we do not have a single teaser loan. In our opinion, we will not have to make any special provision,” Bhatt said.
On interest rates, the SBI chairman said interest rates are expected to go up, but not more than 25-50 bps. SBI, which raised its rates last month, is not contemplating a rise in both deposit and lending rates immediately, he said. Bhatt also said the bank was comfortable on liquidity.
“We have three per cent excess SLR currently. We have enough liquidity in SBI, partly because retail deposits grew at a good pace, and partly because we picked up bulk deposits quite early and also because of the response we got on the retail bond issue,” Bhatt said.
On the proposed rights issue, Bhatt said it may happen in the early part of the next financial year.

Why you should go for a fixed home loan rate now

Some analysts indicate that home loan interest rates may rise in the near future. There are indicators to this effect. The high inflation rate of around 10 % could affect the stable macroeconomic and interest rate environment here.
The Reserve Bank of India (RBI) may hike the key interest rates again to cool down the inflation rate in the next credit policy review in the next couple of months. The inflation rate has been rising due to the rising food prices.
The RBI had hiked the key rates in the Annual Credit Policy for 2010-11. It increased the short-term lending and borrowing rates and the portion of banks' deposit with it by 25 basis points each.
The move was aimed at controlling the inflation rate spiral without choking growth. It had hiked the key lending and borrowing rates, as also the mandatory cash reserves banks park with it by 0.25 %.
Hike in rates will raise cost of funds for lenders
The RBI increased the repo and reverse repo, the rates at which it lends to and borrows short-term money from banks, by 25 basis points. It hiked the cash reserve ratio (CRR), the portion of money that commercial banks deposit with the central bank, by an identical percentage.
The move was to draw out Rs 12,500 Cr from the system. The hike in the repo and reverse repo rates, to 5.25 and 3.75 % respectively, will raise the cost of funds for lenders.
At that time, borrowers could breathe easy as there was enough liquidity in the system. The policy actions resulted in the cost of funds going up which was absorbed by the banking system.
Interest rates may increase in coming months
Likewise, the RBI had said that it will continue to monitor macroeconomic conditions, particularly the price situation, closely and take further action as warranted.
The three major factors that could have a bearing on inflation are uncertain monsoons, volatile prices of crude oil in the international markets, demand pressures.
Presently, all these factors are uncertain. The global factors including the euro crisis, volatility in the stock markets, oil prices etc are all causes of concern. The inflation rate hasn't really reversed.
The economic growth is contingent to a large extent on the monsoons. All these micro and macro indicators indicate that the interest rates may again increase in the coming months. Bad monsoon, global cues and spiraling inflation, can push up interest rates.
Realty attractive
Following the global slowdown the property prices went through a correction. Now, as the economy has staged a recovery, the prices too are on an upward trend.
There is more job security and homebuyers are back in the market. Regardless of the interest rate movements, this is a good time for those planning to buy property to make a move. The question is which one to go for—fixed and floating rates.
Fixed rate ideal
Those planning to purchase a house may do well to lock-in their borrowing now. They should go in for a fixed rate loan. As such, there is no concept of fixed rate loans for the entire tenure of the home loan. The interest rate is generally fixed for only two or three years, after which it is subject to revision. Yet, one should lock into a fixed rate loan.

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.

Fixed rates loans the best option

The RBI increased the repo and reverse repo, the rates at which it lends to and borrows short-term money from banks, by 25 basis points. It hiked the cash reserve ratio (CRR), the portion of money that commercial banks deposit with the central bank, by an identical percentage. The move was to draw out Rs 12,500 crores from the system. The hike in the repo and reverse repo rates, to 5.25 and 3.75 percent respectively, will raise the cost of funds for lenders.
At that time, borrowers could breathe easy as there was enough liquidity in the system. The policy actions resulted in the cost of funds going up which was absorbed by the banking system. Moreover, the RBI had said that it will continue to monitor macroeconomic conditions, particularly the price situation, closely and take further action as warranted. The three major factors that could have a bearing on inflation are uncertain monsoons, volatile prices of crude oil in the international markets and demand pressures.
Presently, all these factors are uncertain. The global factors including the euro crisis, volatility in the stock markets, Greece debt crisis, oil prices etc are all causes of concern. At home, the inflation rate hasn't really reversed. The economic growth is contingent to a large extent on the monsoons that are not yet very certain.
All these micro and macro indicators indicate that the interest rates may again increase in the coming months. A bad monsoon, global cues, and spiralling inflation, can push up interest rates again.
Realty attractive
Following the global slowdown the property prices went through a correction. Now, as the economy has staged a recovery, the prices too are on an upward trend. There is more job security and homebuyers are back in the market.
Regardless of the interest rate movements, this is a good time for those planning to buy property to make a move. The question is which option to go for between fixed and floating rates.
Fixed rate ideal
Those planning to purchase a house may do well to lock-in their borrowing now. They should go in for a fixed rate loan. As such, there is no concept of fixed rate loans for the entire tenure of the home loan. Nowadays, the term fixed rate loan is relative. The interest rate is generally fixed for only two or three years, after which it is subject to revision, depending on the market rates of interest. Yet, one should lock into a fixed rate loan.
Some analysts indicate that home loan interest rates may rise in the near future. There are indicators to this effect. The high inflation rate of around 10 percent could affect the stable macroeconomic and interest rate environment here.

Steps For choosing a safe, beneficial home loan

Owning a home is a dream of every person. Purchasing a home may mean different things to different people. To a middle- class person, it is an achievement of a life-time, while for the affluent it may represent their arrival on the social stage.
Nevertheless, whatever one’s means, banks and housing finance companies have consistently played a pivotal role in fulfilling this basic need? For a safe and beneficial home loan, proper awareness over the products, policies, terms and conditions of the bank is most important as ignorance may result in wrong decisions having a lifelong impact.
WHILE CHOOSING A HOME LOAN MANY QUESTIONS ARISE
How do I go about obtaining a loan?
How do I find a property that suits my budget?
What will be the EMI? How is it calculated?
What are the eligibility conditions for a home loan?
What are the home loan rates offered by Banks?
These are basic questions that need to be answered! Obtaining a home loan may seem very cumbersome but a systematic approach will allow you to be a proud owner of your home.
CHOOSING THE LENDER

First before one sets out on the journey to buy a home one needs a pre-qualified home loan. Without this in hand, it isn’t recommended you begin your search for a new house. The more you hunt for a home without funds, the greater will be the stress. The first step towards your loan is choosing the besthousing finance companies (HFC) which can guide you through the entire procedure.
Various points need to be kept in mind when discussing and finalising a home loan - interest rates, application processing fee (generally around 0.50% to 1.00% of total loan amount), legal charges, pre-payment charges, valuation fees, and other hidden costs.
WHILE CHOOSING THE BEST OPTION COMPARE FOR THE FOLLOWING IN THE COMPETITION

Check the rate of interest being charged.
Check the processing fees being charged.
Check the movement of the benchmark rate over the last two years.
Check the partial and prepayment fee clause.
Consolidate debt so that not more than 50% of the monthly income is going into servicing debt.
THE PROCESS

Once you have identified the right institution, you will need to fill some forms: an application form, Know Your Customer form (KYC), age proof, and submit employment and Income details to the financial institution. The application is processed on the basis of income papers and KYC documents of the customer.
After this the Bank will do a due diligence to verify the authenticity of the borrower and check the veracity of the income papers. Once the due diligence is over, the Bank will assess the repayment capacity of the applicant and then sanction the loan on the basis of his/her credit worthiness.
On the basis of the sanctioned loan, it becomes easier for the applicant to identify the property. Later, if the applicant wishes to downsize the loan sanctioned, it can be done by simply intimating the same to the bank.
SELECTING THE RIGHT PROPERTY

Choosing the right property depends on various factors like budget, area, amenities, location, proximity to workplace , convenience. The importance you assign to each of these would depend on one’s profile, income and age.
A young executive, for e.g.,  would give importance to amenities, proximity, convenience, area and location. A senior level executive would prefer area, location, amenities, convenience, and proximity keeping in mind that the area where the house is located is a symbol of his social status.
A good real estate consultant who understands the wishlist can speed up the process.
TAX IMPLICATIONS

Government of India has provided various tax benefits on home loans.
The interest of up to Rs 1.50 lac paid on home loan on self-occupied property during the financial year can be availed by the borrower as a deduction from his/her income for that year. In addition, the borrower also gets an exemption within overall limit of Rs.1 lac under Section 80C of Income Tax Act for Principal amount repaid by him/her during the financial year.
The interest paid by the borrower on the home loan, till completion of construction of the property, is allowed as deduction from his/her income, in equal installments for the next five years within the applicable limit.
INTEREST RATES AND FORCED MAJEURE CLAUSE

Almost all banks offer home loans with - both fixed and floating rates of interest. As a thumb rule, the customer should go for floating rates when the rates are expected to fall and fixed rates when they are expected to rise in future. However you must realise that there is something called as Forced Majeure Clause. The Force Majeure Clause enables the lender to undertake appropriate modifications in the interest rates on home loans they sanction to their borrowers. This situation applies even if the borrower has opted for a home loan at a fixed interest rate.
So, while you read your home loan agreement papers, you can spot statement like this Provided further that from time to time, the bank may in its sole discretion alter the rate of interest suitably and prospectively on account of change in the internal policies or if unforeseen or extraordinary changes in the money market conditions take place during the period of the agreement.
There is a lot of awareness out there in the market and customers are increasingly examining the various aspects vs - vs home loans. Having said this, one should not get swayed by the lucrative interest rates and other such schemes being offered. Buying a home is definitely a dream comes true and home loan fulfils that dream. I will advise you to spend considerable time with your banker in helping you make a fair decision so that your dream home always has pleasant memories. Click Here for Apply Home Loan

HOME LOANS | Advantages of Joint Ownership

There are many advantages of taking a home loan in joint name. There are tax benefits, joint benefits etc.
Tax benefit:
If the owned property is being used for living, the annual value of the said property is deemed to be nil. Moreover, you could claim a deduction for the interest paid on the home loan (for purchase or construction) up to Rs.1.5 lac, (subject to conditions). This would result in a loss under the head - house property of up to Rs.1.5 lac, which could be set off against other incomes.
If the property is let out, the actual amount of housing loan interest, without limit, could be claimed as deduction. Also, an individual can claim a deduction up to Rs.1,00,000 for re-payment of the principal amount u/s 80C of the Income Tax Act, 1961.
Joint benefits:
It is very advantageous to buy a property in joint name as each individual has the right to claim tax benefits. So if a property is owned by husband and wife together then both are entitles to claim deductions individually.
There is no rule as to the number of co-owners or who the co-owner is (brother, spouse or parents).
Following are the points to consider:
• The house should be bought in the joint name and care should be taken to keep the proof of co-ownership.
• The housing loan should be taken in joint names.
Repayment
The repayment of the loan should be done individually or from their joint bank account. The funds in the account should be contributed by the co-owners in proportion to their ownership/loan. Co-owners should have their independent sources of income from which the loans are re-paid.
Tax benefits are available in proportion to the joint ownership and the loan taken by the co-owners.
Additional benefits:
• If more than one person takes a home loan then income of all the co-owners will be considered by the lenders. This can help increase the size of the loan.
• In many states, a lower property registration fee is levied in case the property is owned by women either individually or jointly.
If husband and wife jointly own a property reduces the succession issues.
• Buying a house jointly facilitates a larger loan as income of all the co-owners would be considered by the lenders.

Home loans and Property Progress are complementary to each other

Home loan providers are now insisting on construction-linked disbursal of funds to new projects, as they look to make developers more accountable after getting stuck in several stalled projects.

A number of developers have either stopped construction midway or slowed down due to shortage of funds and poor sales in 2008 and the first half of 2009. Lending institutions expect the move to help them monitor the progress of construction and make developers accountable, said a senior executive with a public sector bank.

“Buyers in such projects are in a difficult situation. They have to pay monthly installments towards the loan without getting the possession of house. They also end up shelling out monthly rents during the period,” he said, requesting anonymity.

HDFC home loan, one of the largest lenders in the home loan segment, has discontinued the practice of up front disbursals and linked the flow of funds to progress of construction, said another industry executive who asked not to be named. A spokesman for HDFC declined to comment.

Developers initially used to offer homebuyers up to 10% discount on up front payment. These developers subsequently diverted substantial part of funds to other projects. The delay in completion of work left buyers in a lurch. “There is a high probability of default by such borrowers,” said the CEO of a leading housing finance company.

In construction-linked payment, the Housing Finance Companies or banks do not release the funds up front. They release of around 30% funds initially and the rest is disbursed as per the progress of projects. “In such cases since the exposures are not full and the monthly repayment obligation for borrowers will be lower,” said another banker.

“Many developers have now changed the payment schedule to construction-linked as against timebound payment. This is good for the industry,” DLF group executive director Rajeev Talwar said. However, banks and home finance companies should release 30-35% of the funds towards the lands and development cost, Mr Talwar said.

The lenders have also become more conservative in disbursal of loans. In a volatile real estate market, they offer lower valuations for the property against which they disburse the funds.

“Till 2007 when the home prices were escalating, lenders’ valuations were normally higher than the actual price. Currently, the evaluators of these banks normally value to property at 5-10% lower than the actual cost. As a result, the borrowers need to fork out more to bridge the gap,” said an industry executive.

According to industry estimates, disbursements of home loan in the organised system of financing in the first six months of the current fiscal has been around Rs 60,000 crore. In 2008-09, it touched Rs 1,00,000 crore approximately, while in 2007-08 the amount was around Rs 1,30,000 crore.

Axis Bank removes penalty on home loan pre-payment

http://deal4loans.haimachan.com/

Bank offers 25-year tenure, flexible plans to raise loan offtake

Axis Bank, the third largest private sector bank by assets, has taken the lead in scrapping this practice on home loan. The bank has decided not to charge pre-payment penalties to its home loans even when customers shift a loan to a competing bank.
Others, including State Bank of India, Housing Development Finance Corporation and ICICI Bank impose pre-payment penalties when any of their customers seeks to refinance a home loan through fresh loans at lower Home Loan Interest Rates.
Axis Bank Home Loan is the only Home Loan that does not include any pre-payment penalty charge from customers either for part pre-payment or full pre-payment.
SBI and Punjab National Bank have no pre-payment charges if the customer prepays from own resources or if half of the loan is repaid. But if the pre-payment is to be refinanced by any other institution or bank, the customer has to pay 2 per cent penalty on the money paid.
“At Axis Bank, we believe customers have the right to exercise their choice to shift if they find a rate advantage,” said Manju Srivatsa, president of retail banking at Axis Bank.
Axis has close to 50 retail asset centres, which are specialised units dedicated to processing retail loan applications ensuring quicker turnaround time.
Though a small player in the market, Axis Bank's new CEO Shikha Sharma is bullish about growing the bank at a pace it has never seen before. The retail business is expected to fuel a substantial part of the bank’s growth.
The bank had a home loan book of Rs 12,049 crore at the end of the second quarter. It plans to grow its market share through customer-friendly home loan products with a variety of repayment options, like extended tenures, lower rates of interest and quick processing time.
HDFC Home Loan allows pre-payment of only 25 per cent of the opening balance at a time without any charge. For any amount over and above that, there is a pre-payment penalty of 2 per cent.
ICICI Home Finance allows pre-payment of a loan if 12 equated monthly installments (EMI) are kept as outstanding. In case of complete closure of the loan, the bank charges a penalty of 2 per cent of the amount prepaid.
HDFC managing director Renu Karnad Sud said, “Instead of expanding the home loan market, banks are only refinancing through teaser schemes. Pre-payment penalty is charged by banks and institutions because we have a cost to our funds and if we pre-pay, we have to pay a penalty to our lenders. We do not want to penalise customers. We only discourage them from borrowing from other banks to prepay us.”
Axis Bank also has a longer repayment period of 25 years instead of 20 years most players have today. The bank also has a bouquet of innovative home loan products targeted at different category of customers.
For example, it has an extended tenure loan targeted at the young salaried group, who aspire to buy a home with smaller EMIs and a longer repayment period.
“This is to encourage youngsters who have begun earning to buy an aspirational property. This category does not want a huge EMI outgo, but does not mind an extended tenure. The average loan size is Rs 12 to 15 lakh and these schemes have helped us maintain a year-on-year growth of 25 to 30 per cent,” said Srivatsa.
Axis Bank's ‘Step Down home loan’ targets families where parents are nearing retirement and children ha­ve just started earning. The loan is structured in such a way so as to offer higher EMIs at the start and lower installments at a later stage.
These are all floating rate loans with an interest rate of 8.75 per cent for loans up to Rs 30 lakh and 9.25 per cent for loans above Rs 30 lakh.
Axis Bank also has a special home loan scheme that offers an interest rare of 8 per cent for the first year and floating rate for the remaining tenure of the loan where it competes with SBI Home Loan, the pioneer of the 8 per cent home loan scheme.
At present rates, the interest rates applicable for customers from the second year will be 8.75 per cent for loans up to Rs 30 lakh and 9.25 per cent for loans above Rs 30 lakh.