Demand for Home Loans Concentrated Under The slab Rs.10 lakh to Rs. 25 lakh..!


The Reserve Bank of India’s (RBI’s) monetary easing could prompt a rise in real estate demand, leading to prices firming up after having dropped around 4% in the recent past, said Mr. R.V. Verma, CMD,National Housing Bank (NHB), the regulator for housing finance companies (HFCs).

Builders with unsold stock may raise home prices, Mr. Verma said on recently.

“The Residex (index of property prices in various Indian cities) for January - March could reflect this trend. We are watching it closely,” Mr. Verma also said.

RBI cut the key policy rate by 0..25% in its 29 January, 2013 review of monetary policy, and analysts expect it to follow an easy money policy to boost economic growth.

Following the RBI rate cut, several banks announced cuts in lending rates, fuelling expectation of a pick-up in retail housing demand.

NHB also reduced its prime lending rate (PLR), or the rate at which it it lends to other banks, by 0.25 % to 9.75 % .

The rise in demand will be mainly in tier II & tier III cities where prices are still affordable, said Mr. Verma.

There has been a position of oversupply, which has had a moderating effect on prices. Prices are down 3 to 4%, primarily in tier II & tier III cities, because this is where the demand for housing loans is concentrated under the slab of Rs.10 lakh to Rs. 25 lakh,” Verma said.

Banks have a about 67 % share of the housing finance market, estimated at Rs. 7 trillion as of 31 December. In the Trend &  Progress of Housing in India 2012 report released on recently, NHB said the housing finance industry could see about 20 % growth in 2012-13 from the previous year.


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