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Home Loans & Related News

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  • Re : Home Loans & Related News

    SBI home loan borrowers can avail this offer to pay lower EMIs

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    Updated:
    Sep 16, 2020, 10:13 AM IST Highlights

    New Delhi: In what could bring relief to lakhs of State Bank of India (SBI) customers, the PSU Bank is offering option to its existing home loan borrowers to switch over to EBR stands for External Benchmark Rate from the existing MCLR based loans.

    By paying a one time switchover fee plus GST, SBI home loan borrowers can avail the above option on lower interest rates. Additionally, women loan borrowers will get an a special discount of 0.05 percent on interest rates.

    What is EBLR? Is it a new option?

    EBLR stands for External Benchmark Lending Rate. SBI has adopted Repo Rate as the external benchmark to link its floating rate home loans with effect from October 2019. Floating rate home loan borrowers with regular account conduct as on the date of switch over, can be migrated to the new interest rate structure. It is a new interest rate structure. All floating rate home loans will have interest rates linked to External Benchmark.

    How much is the fee?

    Customer will have to pay one time switch over fee of Rs 5000 plus taxes is applicable.

    When does interest rate change under EBR Option?

    The interest rates will change at quarterly interval on 1st day of calendar quarter subsequent to the change in RBI’s Repo Rate. It may be noted that the RBI slashed repo rate to 4 percent since the COVID-19 outbreak.

    Rates of interest for various home loan options

    Currently SBI's EBR linked home loan rates start from 6.70 percent. Those on MCLR based home loan rates pay interest rates starting forom 7.45 and base rate linked home loans borrowers pay interest starting from 7.85 percent.

    Those with long outstanding home loans can benefit from EBR, given its lower interest rate and also the resetting of interest rates based on RBI's revision in repo rates.











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    • Re : Home Loans & Related News

      Demand for affordable home loan mostly from tier III, IV towns: Capri Global

      We are into secured lending and we do not expect NPA to rise more than 1% to 2%.
      Last month, our disbursement was at par with that in FY19. This year we are targeting 10-12% growth, says Rajesh Sharma, MD, Capri Global Capital.

      How do you think the slight pickup that we have been seeing in the economy is translating in terms of disbursements and credit growth right now?
      As per the leading rating agencies, home loan, gold finance and MSME lending are going to register lesser asset quality and NBFCs with the strong balance sheet and ample liquidity are going to benefit at the cost of others. Disbursements have already started from the August month onwards but only select players are doing it. At Capri, we have adequate liquidity and we got a lot of credit lines during the last four month and we have utilised that towards prepayment of the loan and we were able to negotiate better terms. Last month, our disbursement was at par with that in FY19. We have already reached the same level and at this year we are targeting 10 to 12% growth.

      On restructuring, how much are you expecting to see in terms of NPAs in the near term?
      So far we have received only a few requests for restructuring. We have seen the same trend with banks and other peers also. Some of the borrowers will approach us maybe after two, three, four months but as of now we do not see much impact on the restructuring side. A lot of customers have already been given emergency credit lines by banks and NBFCs. We are only into secured lending where home loans and loans to MSME are secured and we expect NPA to rise at most by 1% to 2%.

      How far are you now from your pre Covid levels in terms of collections and disbursements?
      In the last six months, collection efficiency has been improving month after month. When the April moratorium was announced, almost 53% MSME customers and 37% home loan customers had opted for the moratorium.

      At the end of August, the moratorium rate has come down to about 37% on cost basis and to about 24% on cost basis in home loans. There is an uptrend in the collection efficiency. Among all our customers, almost 38% customers have paid all the six EMIs during the last six months and only about 8% customers have not paid anything.

      Looking at this trend, we are confident that the pickup of the economic activity as lockdowns are eased out, will help the economy to pick up and hence collection will also improve. Being a secured portfolio. we are seeing a better trend. If we talk about other auto finance, infrastructure finance and large ticket size lending, I think in wholesale finance and other areas, there would be some stress.

      Given that the MSMEs account for about 51.5% of the total AUM mix, what is the outlook on this sector? Are we out of the woods or do you expect that the government to come out with another package to help the revival process here?
      In case of MSMEs, majority of the activities are happening in tier III, tier IV towns. Except for metros, rural and semi-urban and urban areas are already back to near normalcy. Last month we achieved pre-Covid level of disbursement and we see activity level going up. For MSMEs, liquidity has already been provided through NBFCa and banks by various measures including emergency credit line and push. Not much more will be required on liquidity side. What is required is that all the lending institutions assess their viability and on that basis, they are more flexible about giving them the loan, MSME are still doing well in terms of collection efficiency also.

      Given your outlook on the housing finance industry that constitutes 23% currently, are you seeing increased inquiries for loans for owned houses? Is the growth largely from the tier I, II cities?
      We are in the segment of affordable housing where the cost of the house is less than Rs 30-35 lakh and these are mostly in tier III, tier IV towns where there are self construction plots and ready-to-move-in inventory. In these areas, a lot of demand is coming from the home loan. primarily for two reasons: a) during the pandemic, people have realised the visibility and the importance of the home plus a lot of people want to take the advantage of the fact that home loan interest rates have come at least 150 basis in the last six months. So a lot of home loan demand is coming up and we are disbursing as well.












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      • Re : Home Loans & Related News

        Low finance options leading to increased home sales: Emkay

        Investment demand is yet to recover and city-centric sales are being driven largely by younger customers in the age bracket of 32 to 38 years, said the Emkay report.
        • ANI
        • Updated: October 07, 2020, 18:44 IST

        MUMBAI: Residential launches and sales across the country are at 50 per cent of the pre-Covid level while the office space absorption is at 30 per cent, Emkay Global Financial Services said on Wednesday in a pre-festive channel check report.

        This is primarily driven by historically low financing rates, upfront discounts and regulatory reliefs on stamp duty charges. Investment demand is yet to recover and city-centric sales are being driven largely by younger customers in the age bracket of 32 to 38 years, said the Emkay report.

        In the first half of calendar 2020, residential launches were down by 46 per cent year-on-year to 60,489 units except for Kolkata which showed an increase of 37 per cent. All other major cities were down by 30 to 80 per cent.

        Continuing in line with the past trends, 58 per cent of new launches were in the less than Rs 50 lakh category. But investor demand for apartments is currently missing from the market and the share of affordable housing in sales is down by 300 basis points to 47 per cent, said Emkay.

        In the commercial real estate segment, the supply is reported to be down 27 per cent to 1.6 million square metres for H1 CY20.

        The supply is impacted severely in every city (down 50 to 90 per cemt) except Mumbai (plus 90 per cent due to low base in last year) and Chennai (plus 11 times due to one single property being completed).

        The IT sector is a large consumer of commercial space and has been in a wait-and-watch mode.

        "The government stimulus to real sector has not been given on the demand side but large positive stimulus given to the supply side which will benefit selective strong players in the market," said Emkay.

        Mortality within smaller and weaker players is expected to be higher, it added.











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        • Re : Home Loans & Related News

          RBI to rationalise risk weightage on housing loans to push demand

          With revision in the risk weightage, the requirement of capital provision for banks will come down. This will encourage banks to push housing loan products with attractive features.
          • PTI
          • October 09, 2020, 15:00 IST

          MUMBAI: In order to promote the housing sector, Reserve Bank of India on Friday decided to rationalise risk weightage on housing loans, making the product attractive for both borrower and lenders.

          With revision in the risk weightage, the requirement of capital provision for banks will come down. This will encourage banks to push housing loan products with attractive features.

          "Recognising the criticality of the real estate sector in the economic recovery, given its role in employment generation and the interlinkages with other industries, it has been decided, as a countercyclical measure, to rationalise the risk weights by linking them only with Loan to Value (LTV) ratios for all new housing loans sanctioned up to March 31, 2022," RBI Governor Shaktikanta Das said.

          Such loans shall attract a risk weight of 35 per cent where LTV is less than or equal to 80 per cent, and a risk weight of 50 per cent where LTV is more than 80 per cent but less than or equal to 90 per cent, he said.

          This measure is expected to give a fillip to bank lending to the real estate sector, the statement on Developmental and Regulatory Policies said.

          According to a Bank of India senior official, the RBI's move will give a major boost to the housing sector particularly the retail housing.

          "Banks will definitely be benefited with lower provisioning by lending to this segment which will ultimately encourage banks to make this product more price attractive," the official said.

          Commenting on the decision, Housing.com Group CEO Dhruv Agarwala said rationalising risk weightage on home loans and linking it to LTV ratio will effectively result in higher credit flow to the real estate sector, which is positive news for the sector.

          Also, the hike in credit limit for retail exposure by a single lending entity from Rs 5 crore to Rs 7.5 crore is a welcome move that will immensely help both retail as well as small businesses, he said.

          As per the present RBI instructions, the exposures included in the regulatory retail portfolio of banks are assigned a risk weight of 75 per cent.

          For this purpose, the qualifying exposures need to meet certain specified criteria, including low value of individual exposures. In terms of the value of exposures, it has been prescribed that the maximum aggregated retail exposure to one counterparty should not exceed the absolute threshold limit of Rs 5 crore, the statement said.

          "In order to reduce the cost of credit for this segment consisting of individuals and small businesses (with turnover of up to Rs 50 crore), and in harmonisation with the Basel guidelines, it has been decided to increase this threshold to Rs 7.5 crore in respect of all fresh as well as incremental qualifying exposures," it said.

          This measure is expected to increase the much needed credit flow to the small business segment, it said.











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          • Re : Home Loans & Related News

            Raipur: Debt recovery tribunal quashes PNB housing's notice to home buyer

            Applicant’s counsels Nirnay Gupta and Shreyas Dubey said Verma had participated in the e-auction for purchase of an immovable property in Raipur district and was declared successful for bidding at a price of Rs 9.60 lakh.
            RAIPUR: In a significant order providing relief to a person who faced financial crisis during lockdown, the debts recovery tribunal has quashed the notice issued by public sector bank’s housing finance company, allowed the applicant to deposit the remaining amount and issue sale certificate and handover possession of property purchased through e-auction.

            Kamlesh Verma, a resident of Shanti Nagar colony, had filed an application under Securitization and reconstruction of financial assets and enforcement of security interest Act (SARFAESAI) 2002 for quashing the notice issued to him by PNB Housing Finance forfeiting his deposit and seeking other reliefs.

            Applicant’s counsels Nirnay Gupta and Shreyas Dubey said Verma had participated in the e-auction for purchase of an immovable property in Raipur district and was declared successful for bidding at a price of Rs 9.60 lakh. The applicant had deposited Rs 96,000 pre-requisite earnest money for participating in the bidding process. The PNB housing finance granted him 15 days’ time to deposit the remaining amount of the reserved price and the applicant deposited the second instalment of Rs two lakh on May five this year.

            During the argument before the debt recovery tribunal Jabalpur, which had its sitting at Cuttack, applicant’s counsels argued that due to the pandemic spread all over the world and lockdown being departed throughout the nation, the financial health of the applicant became sensitive and he could not overcome the financial burdens because of continuous lockdown and loss of business. Hence, the applicant persistently requested PNB housing to grant a few months’ time to deposit the remaining amount to get the physical possession of immovable property and sale deed registered in his name.

            However, the housing finance company on June 30 issued a forfeiture letter and informed the applicant regarding the deficiency in full payment along with re-auctioning of the secured asset, according to the order. Later, the applicant approached the tribunal alleging that the housing finance company went ahead for re-auction despite his willingness to pay the remaining amount.

            After hearing both the parties, the debt recovery tribunal presiding officer P Ravi Kiran passed an order noting the submission of the applicant that he could not deposit the amount due to CoVID-19 pandemic situation and his willingness to pay the balance amount.” If the applicant has not paid in time 25 per cent of sale confirmation amount within the stipulated period, it was the duty of the financial institution to issue forfeiture letter but the financial institution issued such a letter only after receipt of Rs 2 lakh and after three months 10 days of auction which is not permissible under the law”, the order said.

            The tribunal quashed the notice and letter of the financial institution and directed PNB housing finance to allow the applicant to deposit the balance amount of Rs 6.64 lakh within 30 days, issue sale certificate and handover possession of immovable property within 15 days from the date of deposit of the amount.















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            • Re : Home Loans & Related News

              home loans: Will RBI’s relaxed loan-to-value rules make home loans cheaper?

              By DK Agarwal



              RBI has rationalised the risk weights and link them to loan-to-value (LTV) ratios for all new home loans sanctioned up to March 31, 2022. This is expected to make the product attractive for both borrowers and lenders.

              According to RBI, retail housing loans will attract a risk weight of 35 per cent, where LTV is less than or equal to 80 per cent and a risk weight of 50 per cent where LTV is more than 80 per cent but less than or equal to 90 per cent.

              The linking of the risk weight of home loans to LTV for all new housing loans is a step in the right direction and will benefit the real estate sector. This measure is expected to give a fillip to the industry, as it is expected to result in higher credit flow.

              The loan-to-value (LTV) ratio refers to the proportion of the property value that a lender can borrow through for a purchase. Previously in June 2017, RBI had introduced a more staggered risk weight system for individual housing loans, depending on the size of loans. Until now, risk weight of home loans was determined on the basis of loan amount and LTV ratio.

              The new measure is expected to provide relief to big ticket borrowers, say above Rs 75 lakh, present share of which is around 12-15 per cent of the total housing loan portfolio, where the risk weight is higher. According to the regulatory norms, banks must set aside minimum capital against a loan, calculated on the basis of the risk weight of the loan category. By adjusting the risk weight, the central bank allows banks to allocate lower capital against such loans, making the category more attractive to them.

              With the revision of the risk weightage, the requirement of capital provision for banks has come down. Now, they can offer differential interest based on the LTV, as their capital requirement will be lower thanks to the low risk weight on low LTV.

              The real estate sector has been undergoing a prolonged slowdown. Covid-19 has come as a new blow to the sector, leading to a temporary halt in project launches. Even banks are reluctant to lend and buyers have become financially stressed. However, there are some signs of revival in the real estate sector and this should help augment credit flow.

              To boot, Home sales recovered to 29,520 units in the September quarter from 12,730 units in June quarter. The Bangalore market saw significant improvement in business and almost reached pre-Covid sales level. The Kerala market has performed even better than last year. Even Pune and Delhi markets are showing some improvements. Many real estate companies are now focusing on cash flow and debt management at an operational level, and are trying to not let their debt levels rise.

              Green shoots are being seen in the real estate sector, and they are now giving hope that all the sectors will move in pace towards recovery. In September quarter earnings, IT biggies such as Wipro NSE -0.60 % and Infosys NSE -0.58 % have announced incremental growth in employee counts. This signals good growth in demand for houses too.

              And RBI’s latest initiative will encourage banks to push housing loan products with attractive features. Home loans will become more easily accessible and competitive for customers. Interest rates are already at lower levels. As demand returns slowly, larger, established developers are poised to gain the most. Therefore, investors can think of allocating a small portion of their investments towards real estate in a staggered manner.












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              • Re : Home Loans & Related News

                High home loan demand triggers interest rate war

                Demand has been triggered because of work from home (WFH) needs, discounts by builders, reduction in stamp duty rates and interest rates being at an all-time low.̥

                MUMBAI: A surge in demand for home loans in October has triggered a rate war. Kotak Bank is now offering home loans at 6.75% — the second reduction in less than a month. A host of banks are offering loans at 6.8% to 7%, resulting in the spread between these and government bonds narrowing down to 80 basis points (100bps = 1 percentage point).

                Banks say that home loans are a safe bet and this is the only segment growing in double digits. Demand has been triggered because of work from home (WFH) needs, discounts by builders, reduction in stamp duty rates and interest rates being at an all-time low. The frequent changes in pricing among lenders seem to indicate that a rate war is brewing as the banks compete to grow the home loan book, which is seen as the safest category of loans.

                In the last few days, Bank of Baroda and Union Bank of India had slashed their home loans to 6.8% and 6.9%. SBI recently announced discounts of up to 25bps on loans above Rs 75 lakh for customers applying from its app Yono. HDFC also offers loans at 6.9%.

                Speaking to TOI, Kotak Bank group president (consumer banking) Shanti Ekambaram said that the lender was seeing an increase in demand for housing as the shift to WFH had resulted in homeowners looking for larger accommodation. Also, developers and state governments were offering additional incentives to home buyers.

                “We are seeing demand back at pre-Covid levels and we want to open our doors to home loan customers as part of our acquisition strategy for long-term customers,” she said. According to Ekambaram, home loans were the best asset class, and offering the lowest rate enabled the bank to attract top quality customers.

                While announcing the results, Punjab National Bank MD & CEO S S Mallikarjuna Rao said that home loans have gained momentum and are heading to pre-Covid levels. Home loans have been a major driver of credit, growing nearly 10% on a year-on-year basis to Rs 84,000 crore.

                For HDFC, home loan disbursements in October 2020 have been the second-highest in any month in the institution’s history. Mumbai saw the highest demand followed by Delhi and Bengaluru, while Hyderabad and Chennai were a bit slow. “The demand that we are seeing is largely transactions that were initiated post-Covid and is not pent-up demand. We hope that this will be sustained,” said HDFC VC and CEO Keki Mistry.

                Ekambaram says that the renewed demand for housing is an opportunity for Kotak Bank, which was not part of the top-five home loan lenders. The bank now offers home loans at 6.75% for salaried borrowers with a Cibil score of over 750 and loan-to-value of 80% and below. For self-employed borrowers, the rate is 6.85%, all other conditions being similar. The same rates will be available for borrowers seeking balance transfers.
















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