National Housing Bank: Rolls Out Scheme to Boost Fixed Rate Housing Loans..!

Banks and HFCs giving fixed rate housing loans up to Rs.10 lakh for 15 years from NHB at a interest of 8.60% to 8.75%.

To encourage fixed rate houisng loans for the low and middle income segments, the National Housing Bank (NHB) has come out with a special refinance scheme for banks & housing finance companies (HFCs).

Mr. R.V. Verma, Chairman and Managing Director, National Housing Bank, said,'' Banks and HFCs giving fixed rate housing loans up to Rs. 10 lakh can get refinance for 15 years from NHB at a concessional interest of 8.60% to 8.75%. Fixed rate home loans are aimed at mitigating the interest rate risk that retail borrowers face"

 Added, on the sidelines of a conference where MoUs were signed between Credit Guarantee Fund Trust for Low Income Housing and 6 institutions, including Bank of Baroda and IDBI Bank.

However, Mr. Verma observed that above 90% of the home loans is on floating interest rate due to retail customers’ preference.

“We need to create awareness about the refinance scheme among the lending institutions. Housing loan borrowers in the low and middle income segments could be benefited if they get fixed rate loans,” he also told.

NHB has received applications from HFCs, such as HDFC, LIC Housing Finance Ltd (LIC HFL) and Dewan Housing Finance Ltd, to raise ECBs (External Commercial Borrowings) aggregating $ 80 crore. NHB itself plans to raise about $ 20 crore via ECBs.

NHB has sought clarifications on the stringent requirements for builders / promoters , who want to directly access ECB for building affordable housing projects, regarding local regulatory and environmental approvals.

Though builders can raise ECB through NHB, none of them has approached the Bank so far.

NHB will float tax-free bonds to raise Rs. 5,000 crore in the next fortnight, Mr. Verma further said.

Of the total issue size, Rs. 3,750 crore has been earmarked for retail investors while Rs. 1,250 crore will be raised through private placement to institutional investors.

NHB sees housing finance in the country growing at 18 to 20%  / or Rs 1.30 lakh to Rs. 1.40 lakh crore credit offtake in 2012-13.

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