There is a reason to cheer for the home loan aspirants as banks are deciding to focus more on small-ticket home loans.
Recently the banks have been going slow in their home loans due to the crisis but now they are planning to go against their move by focusing more on home loans below Rs 25 lakh. Bankers said that are also anticipating an increase in demand for small-ticket home loans following which they are providing attractive offers and speedy procedures to persuade the customers.
Chairman and Managing Director of Andhra Bank, Mr R.S. Reddy said, "There is a 75 basis point reduction in the interest rates on home loans. This will drive demand."
Andhra bank is going to focus more on home loans ranging between Rs 10 lakh and 15 lakh and it would "definitely help profitability," added Mr. Reddy.
Managing Director of State Bank of Hyderabad, Ms Renu Challu feels that even the recent announcement by RBI regarding the reduction of capital requirements for home loans is expected enhance the banks' lending. "Definitely, there will be a big push. SBH will also push home loans below Rs 20 lakh and 25 lakh aggressively. It is a priority sector for us," she said.
Home loans are also viewed under the priority sector by most banks but it is thought that even the real-estate developers should few steps to attract the buyers. "To regain the momentum, there should be a little effort from the builders' lobby as well. They had taken the prices to unaffordable levels which should be brought down," said Mr Reddy.
He also added that there are discussions with some builders regarding giving special discounts and scaling down prices to boost the demand. However there are some like DLF that have refused the finance minister's suggestion of price cut.
On the other hand they are now a little relaxed by the banks revising down their home loan rates. "The coming down of home loan rates will be beneficial for the end-users in buying properties at a better price. The developers will also be benefited as it will reduce lending cost," said an official associated to DLF.
"DLF has increased its focus on mid-income housing and is already working on thin margins of 35 per cent which rules out price reductions. However, our offerings targeting mid-income groups are going to be well within the reach of consumers," he added.
The second quarter of the current fiscal showed a slight fall in home loan growth of most banks. The growth in the housing sector increased by around 14% to Rs 32,792 crore during the period up to August 31st, 2008 as compared to Rs 34,333 crore, a year ago.