Good times for home buyers - Home loan interest rates plummet

Good times for property seekers aren’t that far. The home loan rates have plummeted. Affordable housing is also being promoted. Here are the technicalities:

The floating home rates  on new loans across loan slabs have been reduced by up to of 75 basis points (bps). State Bank of India,  is also likely to introduce a scheme where home loans up to 30 lakh will be made  available at 10.5% instead of the card rate of 10.75%.

IDBI’s revised rates will come into effect starting April 2, 2012. The floating interest rates for home loans upto  25 lakh have been reduced by 10.75%(25 bps) , the extent of reduction is progressively higher for larger loan amounts - from 50 bps on loans ranging from Rs 25 lakh to less than Rs 75 lakh (11%) to 75 bps on loans of Rs. 75 lakh and above (11.25%).

HDFC, the largest home finance company, is running a festive offer scheme.HDFC will be offering  offering home loans of up to Rs 30 lakh at the rate of 10.5%, Rs 30 lakh to Rs 75 lakh at the rate of 10.75% and loans above Rs 75 lakh at the rate of 11%.

Canara Bank has reduced the home loan rates from April 2. “The rate of reduction is for all borrowers across repayment tenors and quantum slabs”, said a press release from the bank. With the revision, the rate of interest now ranges between 10.75 per cent and 11.25 per cent.
The bank has waived additional interest of 25 bps for acquiring another residential unit. The release from the bank also said that the bank has enabled a Web-based application in its Web site, through which both existing and prospective customers can submit loan applications online for housing loans.

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Not Only One, Investors Look to Own Second Home

Publication: The Economic Times

Investment in real estate has seen a change in investors’ mindset. Apart from owning a house, people are increasingly looking to buy a second property to earn some investment income out of the property. And, when it comes to buying a house purely from an investment point, choosing the right city or location becomes most important. “The focus should be on properties that have potential for assured rental yields and capital appreciation. This includes residential projects close to workplaces and industrial hubs,” says Om Ahuja, CEO - Residential Services, Jones Lang

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Popularity: 45% [?]

High living

  Publication: The Times of India

Over the last decade, lifestyle has become a decisive factor in the realty industry As per the evolving market trends, the developers are adding the ‘luxury’ factor in the properties with state-of-the-art amenities. There has been an increase in number of projects in the premium and luxury residential segment that have been conceptualised and successfully marketed in the last few years. “This new range of exclusive homes is a definite lifestyle statement created with contemporary designs and architecture suitable to all types and sizes of apartments offering luxury facilities and amenities,” says a Kalpataru spokesperson. These homes aim at providing convenience to the customers right at the doorstep.

With the increasing presence of the IT ITeS sector in many cities of the country, a large segment of Indian home buyers have entered a higher level of affordability and therefore tastes in homes. This has led to a greater emphasis on larger sizes, evolved ambience and interior decor in the choice of properties. “India is now seeing a strong trend in ’smart’ and green’ homes, township properties and gated communities, all of which have high levels of lifestyle quotient attached to them,” says Om Ahuja, CEO - Residential Services, Jones Lang LaSalle India. Seconds Manoj John, Vice-President, Corporate Planning and Strategy - RNA Corp says, “There is also the intrinsic need of achievers to express a success quotient which is manifested in the lifestyle homes they live in. In yesteryears, expensive residences used to be spacious bungalows or row-houses; that perception has changed drastically to include million dollar apartments.”

The changing needs and discerning buyers have forced the property markets to become more innovative and buyer-centric. Today, India is seeing a strong trend in ’smart’ and green’ homes, township properties and gated communities, all of which have high levels of lifestyle quotient attached to them. “With the increasing trends and the change in the economic scenario, buyers have become more discerning and are demanding better quality and services from the developers. As a result, there is a shift in the realty market. Earlier apartments were just houses, but now they are all about housing lifestyle,” says Shailesh Puranik, Managing Director, Puranik Builders Pvt. Ltd.

Home buyers who have been exposed to Western residential real estate trends by virtue of their newly-found globe-trotting abilities also wish to emulate the developed world’s focus on sustainable living. “Comfort, convenience and environmental awareness and responsibility play an important part in home buying today Parking is always a major issue in our metres, so adequate parking is a major focus area in any property purchase. Privacy and self-sufficiency are the new mantra in a country where community living was previously the traditional standard, which gives rise to the interest in townships and gated communities,” says Ahuja.

Lifestyle in the form of amenities in the projects has become necessary today. Amenities are of two types - internal and external. The premium and luxury apartments offer a mix of design grandeur and high-end contemporary facilities - regal layouts, penthouses and duplex options, manicured landscapes, centrally air-conditioned buildings, integrated home-automation devices, lavish clubhouse and spa, private plunge pools and Jacuzzi’s, full-lap heated swimming pools, sports facilities, concierge and well-groomed housekeeping services.

The new trend catching up fast is for green buildings which is considered today as the need of the hour for a Greener Tomorrow. “The basic idea to construct a green building is to reduce the consumption of energy using green technologies and green products, adopting renewable energy sources and using conservation techniques that help reduce, recycle and reuse the energy,” says Gopal Sharma, GM - Marketing, Gundecha Builders. In comparison to the tremendous progress in creating world-class townships in the country, Indian realty is yet to fully absorb and implement the concept of green buildings. There are many energy efficient buildings in the country holding LEED gold-rated Core & Shell green building. “The sector is striving to create buildings that match the definition of Green Building which is using less water, optimising energy efficiency, conserving natural resources, generating less waste and providing healthier spaces for occupants, as compared to a conventional building,” says Manju Yagnik, Vice chair person, Nahar Group.

Meanwhile, developers are offering by invitation projects’ to go to that extra mile of providing luxury to customers. “Today the definition of lifestyle living has attained a different meaning among the high society people. They are looking for exclusive homes and signature residences are now being developed to offer experiences that are laden with opulence. These are ‘limited edition homes’ and they are for exclusive class of people. These distinctions have been there since time immemorial. With time the packaging has changed,” says Hermant Shah, Chairman, Hubtown Ltd.

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Popularity: 45% [?]

All the extras that add to the cost of a home loan

 Publication: Financial Chronicle

These are times when individuals are looking for various ways in which they can limit their expenses. This is true for most areas including that of borrowings or taking a loan, as even here, a lower cost means that they have to pay back a lesser amount, which works to their benefit. Some extra costs incurred while taking a home loan need to be watched closely as the interest that is actually paid on the loan, because of the impact of these costs, can be severe. Processing fees: One of the additional expenses that would be incurred for the housing loan taken by an individual would be the processing fee paid at the time of taking the loan. This fee is recovered for the various expenses that are incurred by the bank at the start of the loan tenure itself. These fees are usually charged in two ways. One of them is to have this as a small percentage of the loan amount that is actually disbursed, say 0.5 per cent of the loan amount till Rs 25 lakh. The other way in which the same fee is recovered is through a fixed amount, though in slabs again depending upon the amount of the loan. For example, the amount could be Rs 15,000 for a loan up to Rs 25 lakh and Rs 25,000 for loans between Rs 25-50 lakh, and so on.

Reductions: One of the options that are being adopted by banks to attract borrowers towards their loans is to reduce the processing fees. There is a lot of importance that has to be given to the term ‘reduction’ in this particular situation.There are two ways in which this can be tackled where a simple route is just to abolish the entire processing charges so that there are no charges that remain under this head. The other way is to actually reduce the amount of the charges so that the borrower will still end up paying some fees but these will be far less than what they would have normally paid for the same type of transaction. Both of them end up with a benefit for the borrower, and hence, they need to check the situation across the different institutions along with the other conditions so that they end up with the right mix.

Higher benefit: One of the things that have been witnessed when such benefits are offered is that there is a specific category of borrowers who actually benefit when such a change is made. What this means is that usually such cuts come into effect for large borrowers when the banks want to push more loans towards this segment of the business. Often the smaller borrowers are left out of the benefit with the end result that they still pay what they were doing earlier. This is the reason why the individual small borrower also needs to take a closer look at the actual figures in terms of the overall amounts that they are paying as these charges. If they are going towards an entity that is charging a lesser amount, then this would be a benefit for them; otherwise, they could still find themselves paying higher charges, while others get the benefit of lower fees. Another thing is that just looking at one aspect of the loan might not be the best way to choose a particular loan provider. So, if there are a lot of relevant factors considered then it would be a better way to choose a particular loan provider.

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Popularity: 45% [?]

Housing prices projects mixed trend

Publication: Financial Chronicle

At a time of slowdown in real estate development, housing prices have more than doubled in three cities of Chennai, Faridabad and Bhopal in four years. A National Housing Bank report released on Monday said three other cities Jaipur, Hyderabad and Bengaluru recorded fall in prices residential properties.
The City wise housing price index, NHB Residex, incorporated in 2007 with a base of 100 said June 2011 quarter showed index for Chennai residential property prices have gone up to 248 from base 100 in 2007, which means property prices of metropolitan city surged 148 per cent during the period. This is followed by city of Bhopal that has witnessed 124 per cent growth; Faridabad comes third with a rise of 120 per cent.

However cities like Jaipur, Hyderabad and Bengaluru have registered a downward trend with 36 per cent, 9 per cent and 8 per cent drop respectively.
“In India land policies have created distortions that have led to inordinate high prices in many key metro cities. In places like Mumbai and Delhi and some large metros, land constitutes 90 per cent of the cost of the house, which signifies we have wrong faulty land policies and with those land policies you cannot have a solution for affordable housing,” said HDFC chairman Deepak Parekh.

The report also revealed that total outstanding housing loans have been growing at a steady pace. While the growth was 21.71 per cent in FY11, it was 20.79 per cent in FY10. Housing finance companies had witnessed a decent growth of 16.12 per cent in FY09. Meanwhile Reserve Bank of India (RBI) is advocating for inclusion of low cost housing loans under the priority sector-lending category. “We are trying to put housing finance for weaker section as part of priority sector. A committee is looking into it. Hopefully, by the first week of Febrary this report will come,” said RBI deputy governor HR Khan on the sidelines of the conference. Union Bank of India chairman and managing director MV Nair is currently heading the committee, which was constituted by RBI to look into various issues, related to priority sector lending. Proper documentation and due diligence standards are also under consideration to ensure that loans extended by banks are for the target segment, which need special attention and treatment, the terms of the report said.

The panel will also review current allocation mechanism for Rural Infrastructure Development Fund (RIDF) and other such funds.”The apex bank is also trying to coordinate with government and market regulator SEBI for developing and broadening the corporate bond market. As much as 40 per cent of the total bank lending is for priority sector including agriculture and small sector industry,” added Khan.

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Popularity: 46% [?]





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