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Realty gloom over home loans

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The year also saw the launch of differentiated home loan products. For instance, SBI launched home loans targeted at government employees and defence personnel

Though real estate prices have corrected in certain geographies and home loan rates have fallen by 30-50 basis points (bps) in 2016 from the previous year, there has not been much demand for home loans. Transmission of rates from the central bank to loan products was the theme for the year.

Interest rates

The Reserve Bank of India (RBI) cut the repo rate by 50 bps through the year. This is the rate at which the central bank lends money to commercial banks in case of a shortfall. The falling interest rate trend began in 2015 and continued in 2016. “Thanks to the falling interest rate environment, there was a 30-50 bps cut in home loan rates,” said Naveen Kukreja, co-founder and chief executive officer, Paisabazaar.com.

However, transmission was slow as banks did not pass on the benefit to end users.

There was, however, a big change in benchmark lending rates. Till 31 March, all floating rate loans were linked to base rates. On 1 April, that changed to marginal cost based lending rate (MCLR)—the new benchmark rate at which banks will lend to new borrowers. MCLR is built on four components—marginal cost of funds, negative carry on account of cash reserve ratio (CRR), operating costs and tenor premium. “With the introduction of MCLR, there is a straight 40 bps cut in the home loans. If base rate is 9.30%, our 1-year MCLR linked to home loan is 8.90%. More or less, the banking industry has followed this,” said M.G. Vaijinath, chief general manager-real estate and housing department, State Bank of India, the country’s largest lender. All new floating rate home loans are linked to 6-month or 1-year MCLR.

Fees and charges

Bankers say there is a shift in other charges as well for home loans. “Typically, the service charge or other charges for a home loan used to be a percentage of the loan amount, and range between 0.25% and 0.50%. That has been coming down to a flat fee of, say, Rs10,000-20,000,” said Sumit Bali, senior executive vice-president and head-personal assets, Kotak Mahindra Bank Ltd.

New avenues

Financial institutions have been focusing on digital products to provide faster services. Many banks have tie-ups with portals such as Bankbazaar, Deal4loans and Paisabazaar to get customers on board. “We have also seen banks getting comfortable with providing home loans online from the application to disbursal. Also there are multiple banks that are working towards building a back-end digital platform,” said Kukreja.

You may see more online home loans next year.

The year also saw the launch of differentiated home loan products. For instance, SBI launched home loans targeted at government employees and defence personnel. “When the Pay Commission was announced, we thought we should offer flexible repayment option for government employees since they tend to buy a house after 45 years of age, when only 10-15 years of their earning life remains,” said Vaijinath.

Banks also saw an uptick in overdraft against home loans.

What next?

Despite a fall in interest rates and price correction in the real estate market, the overall loan market has not grown. This may continue for the first few quarters in 2017. “After the demonetization drive settles, home loan demand will revive. Interest rate is likely to soften because inflation may soften further. There’s a downward interest rate bias,” said Bali.

If you are planning to take a loan, go for a floating rate loan. Also check for all charges besides the interest rate.

Source: livemint

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

On Thursday, Andhra Pradesh Chief Minister N. Chandrababu Naidu said with the estimated expense of Rs. 5,556.74 crore, the construction of more than 2,44,164 houses, out of the proposed 3,03,044, has been commenced under the NTR Housing Scheme 2017.

While addressing the second day of the Collectors’ Conference he also said the construction of the remaining houses will begin soon. He mentioned that Prakasam and the Kurnool districts are ahead of the schedule in the urban housing scheme. Also, the works are in full swing in the Nellore and the Guntur districts under the rural housing scheme.

According to Naidu, the government will complete 2.5 lakh houses by January next year and another lot of two lakh houses by June.

By October 2, 2018, the state government intends to finish the construction of all the houses and plans to celebrate with massive house warming ceremony with local public representatives. This will help them set an example for housing schemes in other states.

Also Read: Raunak Group Presents Apna Pehla Ghar Campaign

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A Mumbai Suburbs’ Swift Transformation From Industrial To A Residential Zone: Wadala

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A Mumbai Suburbs’ swift transformation from industrial to a residential zone: Wadala

An industrial zone primarily, Wadala has undergone a drastic transformation in the past decade. Now an upcoming residential area, this Mumbai suburb is one of the seven islands to form the modern Mumbai. It is located on the Harbour line of Mumbai’s railway network.

Due to its proximity to BKC, large scale land development was inevitable, thus fueling the real estate market. Wadala is bordered by Dadar on the West, Matunga on the Northwest and Sewri on the South. Nestled between south Mumbai and the suburbs, Wadala enjoys strong connectivity by road and rail to most parts of Mumbai.

It has a number of flyovers like the Anik Panjrapol Link Road, Elevated road and Santacruz flyover. Thane, CST and Chembur are connected via the Eastern Highway while the Western Highway connects the locality to Bandra and Borivali. Wadala has the biggest bus depot in Mumbai. Furthermore, the multiple infrastructure initiatives like the monorail, Truck Terminal and the expansion of Highway are in various stages of development.

All this has given rise to residential demand and pushed the property value over the last few years. One of the most populated areas in Mumbai, Wadala has a large number of old temples, churches and dargahs, university campuses, schools, reputed hospitals and is also home to a former world’s largest IMAX dome theater. There are many stores, showrooms and malls around Wadala like the R Mall, High Street Phoenix and Palladium Mall.

Ramesh Nair, COO – business and international director, JLL India says, “A decade ago, property prices at Wadala were as low as Rs 2,800 per sq. ft. and it rose to Rs 14,000 a few years ago.”  As the infrastructure plans are on their way, so are the renowned developers like Ajmera, Dosti Group and Lodha Group among others.

Wadala at present offers one of the highest returns on real estate investments in the region. All the above-mentioned developers have their luxury projects in the area.

Ajmera I-Land introduces Aeon, Zeon and Treon towers with 2, 3 and 4 BHK plush homes. Conceptualized by renowned Singapore based Architects Space Matrix, these spaces with top-of-the-line lifestyle amenities exude exemplary class and finesse. The first residential floor begins at 110 feet from the ground level and offers several modern lifestyle amenities like kid’s pool, swimming pool, gymnasium, club house, open space and landscaped gardens, yoga room, kid’s play area and senior citizen corner.

Dosti Ambrosia is a 36-storey tower nestled in the 18 Acre Township of Dosti Acres. The architecture of the project was undertaken by renowned Hafeez Contractor in the 2 and 3 BHK apartments. It offers an exclusive rooftop swimming pool with 40,000 sq. ft. of landscaped gardens. You will find all modern conveniences like Gymnasium, Tennis Court, Indoor Badminton Court, Yoga and Meditation Room, Elderly Corner, Banquet Hall, Indoor Games, Indoor Badminton Court, Guest Rooms, Restaurant, Grand Entrance Lobby, Kids Play Area, 2 Club Houses and an Amphitheatre.

New Cuffe Parade by Lodha Group offers its residents all the comforts of a world-class lifestyle. The 2 and 3 BHK homes are spread in over 23 acres of land with 15 acres of stunning landscape and 75,000 sq. ft. of the club house. It includes 11 swimming pools, an organic farm, cricket pitch and multiple themed gardens. The buildings are designed by the world renowned WOHA in Singapore and the landscape was planned by Sitetectonix in Singapore.

Also Read: Mumbai to get Building Taller than Burj Khalifa, Road Bigger than Marine Drive

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Rajasthan Government May Hike The Affordable Housing Prices

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Rajasthan Government May Hike The Affordable Housing Prices

The prices of homes under the ambitious Mukhyamantri Jan Awas Yojana are expected to be increased by the state government.

According to the sources in the empowered committee meeting to be held on Monday, a proposal to increase the cost of a low-income group (LIG) and economic weaker section (EWS) houses will be proposed. Urban development and housing (UDH) minister Srichand Kriplani will chair the meeting. The LIG and EWS houses, presently are being constructed on government lands by private builders. These homes are sold at a fixed rate of Rs 1,250 per sq feet; out of which 1000 rupees per sq ft is given by Urban Improvement Trust (UIT), development authorities and local bodies to the builders.

According to provision 4(A) and 4(B), the developers are supposed to build EWS and LIG houses on government land. Seventy-five percent of such government land can be used in building EWS and LIG houses, while the remaining 25% can be sold by the developers. However, since the rates provided by the government are less the developers are not showing interest to construct houses under these categories. Sources said, “In Jaipur, not a single developer has shown interest in constructing houses under this model. The JDA has invited expression of interest (EOI) several times.”

The UDH is leaving no stone unturned to attract the builders in order to achieve the target of constructing 10 lakh houses by 2019. The sources mentioned, “As per the new proposal, the department has proposed to provide Rs 1,600 per sq feet rate to the developers. The land rates have increased subsequently over the period of time; this is why increasing rates has become a need of the hour.”

Sources further added, “The developers are constructing G+3 buildings at present. However, it is not cost-effective. It has been proposed to construct G+2 buildings for LIG and EWS category.”

Also Read: The Impact Of Regulations On The Real Estate Market

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