Low income
housing may soon get a boost with the Indian housing finance regulator, NHB
(National Housing Bank), slashing refinance rates on loans up to Rs. 5 lakh.
Ultimate Borrowers
..!
This would
incentivise primary lending institutions such as banks and HFCs (housing
finance companies) to lend more to low income households, those not having
income above Rs. 15,000 per month, and
also those in the informal sector.
The benefits of lower
refinance rates are likely to be passed on to the ultimate borrowers in the low
income groups, who will now get longer tenure loans at lower fixed rates.
For home loans up to
Rs. 2 lakh, NHB has slashed refinance rates from 10% to 9%.
In the case of loans
of Rs 2 lakh to Rs. 5 lakh, the refinance rate has been cut to 9.25% from 10%t.
Special Refinance
Scheme..!
Mr. R.V. Verma,
CMD,NHB said, ''The reduced rates would be provided under the recently launched
dedicated special refinance scheme for urban low income housing (LIH). Low -
income housing is a new thrust area for NHB. The reduced refinance rates are a
good precursor to the mortgage guarantee trust fund, which will give default
cover up to Rs. 5 lakh. In July - June 2011-12, as much as 35% of the Rs.
14,000 crore disbursed by NHB went towards housing loans up to Rs. 5 lakh. The
aspiration is to grow this to 40% in the current year (July-June 2012). NHB
will now provide long-term fixed rate refinance, for up to 15 years."
Mr. R.V. Verma also
said, "This will help create a long term fixed interest rate market for
housing & benefit low and moderate income households who may not be able to
absorb the volatility in interest rates under the floating rate regime.The
prepayment would also be possible under the new refinance scheme without
attracting any prepayment levy"
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