According to the Reserve Bank of India, banks have collected deposit of about Rs 5.4 lakh crore between November 10 and November 18, while they disbursed only about Rs 1 lakh crore. As a result, many banks have brought down deposit rate by 15 to 25 basis points. Bankers have also indicated that with huge resources and limited opportunity to deploy, they expect lending rates to soften.
“My guess is that there will be a reduction of at least 100 basis points in lending rates,” said R Vardarajan, managing director, Repco Home Finance, a Chennai-based non-banking finance company focused on lending for homes in Tier-II and -III towns with average ticket size of Rs 13 lakh. Affordable houses up to Rs 15 lakh currently attract interest rate of around 9.15 per cent in urban areas and about seven per cent in rural areas. “Growth for banks might be subdued in November and December, but from January onwards banks would look at reducing interest rates, since they will have huge deposits,” he added.
Rajesh Krishnan, managing director & chief executive, Brick Eagle, a PE firm which invests in affordable housing, said “Unless loans to developers of affordable housing projects are declared as priority sector lending, banks will not look at lending to affordable housing projects.”
Some industry insiders said the impact on affordable housing sector would be visible more in the longer term.
“Affordable housing sector would see long-term gains. The segment mostly sees property buys from salaried customers who are end users, so transactions in black money are mostly non-existent. However, fall in the interest rates would help in the rise in sales of affordable houses,” said Parveen Jain, president, National Real Estate Development Council.
Shot in the arm
- Cheaper lending rate will boost housing demand, especially in the affordable category
- Bankers have also indicated that with huge resources and limited opportunity to deploy, they expect lending rates to soften
- Modi govt’s focus on affordable housing has already attracted big players
Credits Business Standard