The standard home loan that banks offer is a floating rate loan. Here, the interest charged by the bank goes up or down depending on the movement of interest rates as determined by the Reserve Bank of India. Floating rates vary from bank to bank; they also depend on the kind of loan taken, tenure and the loan amount.
In order to revive the market during the financial crisis in 2008, banks, resorted to “teaser” loans during the festival season, offering a very attractive interest rate for an initial period, with a higher floating rate later. The State Bank of India, was the first to offer an initial ‘teaser' rate of 8-9 per cent. Borrowers who availed the teaser rates were benefitted because of the steep rise in interest rates at the time. However, the RBI had reservations, since it was concerned that earlier customers continued to pay higher rates of interest. Subsequently, the ‘teaser' rates were withdrawn. It is relevant here to point out that one of the reasons for mortgage crisis in the U.S. was due to the unregulated use of teaser loans, better known as sub prime mortgages....
Promising to usher in transparency and also make builders more responsible towards their customers, the Confederation of Real Estate Developers Association of India (CREDAI) - Andhra Pradesh has recently come out with a code of conduct that its members are to follow....
Taking up construction work? “Do check for fraudulent practices when you order and get the construction material” is the latest caution from the Legal Metrology Department.
When you place order for sand, examine its exact weight before unloading at the construction site as some of the weighbridge operators were found to be indulging in fraudulent practices while delivering material, thus causing loss to the buyers....
Construction is an activity that entails lot of planning and monitoring in every aspect.
One area where most, whether an individual getting his own dwelling built or a builder working on an apartment project, end up ignoring is that of construction material.
While ordering material such as steel and getting it unloaded at the site, one need to be careful to check whether expected quantities have arrived or not....
Home loan demand high despite rise in interest rate
Source : Indian Realty News
Published On :2011-10-06
City :Mumbai
Home Loan Demand High Despite Rise in Interest Rate
Rising interest rates have had little impact on home loans. Borrowings have gone up 21% since March 2010 even as rates have gone up by around 300 basis points in the same period. Some of the pick up in loans is from tier-I and tier-II towns where property prices have remained relatively subdued. Some have also begun utilising their undrawn limits. According to the Reserve Bank of India’s latest data, aggregate home loans by commercial banks rose 21% to Rs 3,64,170 crore as of end August 2011 from Rs 3,00,929 crore in March 2010. In the current year, much of the growth in bank credit has been driven by home loans.
While total bank loans have risen 20.2% year-on-year (YoY) as of August 26, 2011 against 19.3% in the previous year, home loans rose 15.3% in the same period compared to 10.9% in the previous period.The RBI has raised its key policy rates by 300 basis points (one basis point is 0.01%) in the same period. Though home loan rates do not necessarily move at the same rate as the central bank signals, individual banks’ lending may vary by some margin. It is reckoned that on an average home loan rates have gone up by around 200 basis points. Most banks charge 13-13.5% interest for fixed-rate home loans. “The growth is largely coming from tier-II and tier-III centres,” said Keki Mistry, vice-chairman and managing director, HDFC....
