Interest rates raised by LIC housing finance
By Joseph Samson
Nov 24, 2010
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LIC Housing Finance has brought rise in interest rates on some of its schemes. Also a different slab altogether has been created for loans more than Rs 75 lakh in response to strict housing finance norms set by RBI.

"With NHB also planning to increase the risk weightage for loans above Rs 75 lakh, there was a need for some differentiation for loans above that amount," said Mr R.R Nair, Director and Chief Executive of LIC Housing Finance.

With the apex bank raising the risk weightage on home loans above Rs 75 lakh to 125%, putting 80% cap on loan to value ratio and raising provisioning on teaser loans to 2%, home loans are bound to get dearer.

Regulations of such nature are also expected to come from National Housing Bank.

"For us, the impact of the increase in the risk weightage will be around 10 basis points. To that extent, we need to increase capital," he said.

"For loans up to Rs 15 lakh, we get refinance from National Housing Bank under rural housing, which is a cheaper source of funding when compared to the market rate," Mr Nair explained.

With provisioning on teaser loans increased, LICHF has also revised its teaser loan scheme. From now, loans upto Rs 75 lakh will bear interest of 8.75% (fixed) while those above Rs 75 lakh will attract interest of 9.25% till March 2011.


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