Monday, May 5, 2008

Home loan - interest rates

Credit Policy: Home loan rates remain steady:

The cash reserve ratio (CRR) hike took everyone by surprise. The reduced liquidity may lead to increase in the interest rates on loans. At the same time, banks may now have an incentive to lower interest rates on home loans below Rs 30 lakhs as the RBI has reduced the risk weight on such loans. The RBI governor Y V Reddy said, "Reduction in risk weightage is an enabling provision and we expect banks to pass on the benefits to the customers."

According to analysts, banks may not raise interest rates on bigger home loans despite a hike in the CRR. Considering the slowdown in the economy and that interest rates have already peaked, banks may not consider raising lending rates immediately.
Ashish Gupta, The Economic Times

Home loans: Housing finance cos see growth, banks slowdown:

While housing finance companies have registered strong growth in home loan disbursals, banks are seeing a slowdown in this segment. Growth in the housing loan industry has slowed down from 25 per cent in 2006-07 to 12 per cent in 2007-08, according to RBI’s report ‘Macroeconomic and Monetary Developments 2007-08’.

Analysts attribute this fall to the banks’ going slow on retail loans due to rising non-performing assets and problems in recovery. However, housing finance majors have registered strong growth in business.
The Hindu Business Line

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