Housing finance companies may lower lending rates by as much as 300 basis points to 8.5 per cent a year for reconstruction of affordable housing in the floods ravaged Chennai.
National Housing Bank, which governs and refinances these specialised financing companies, has lowered interest rates to 6.5 per cent to ensure flow of loans at concessional rates to the distressed population in Chennai and other parts of flood-hit Tamil Nadu to help them repair, renovate and reconstruct dwelling units.
NHB has created Rs 100-crore corpus for this purpose and refinance under the scheme will be available at fixed rate basis. One basis point is one-hundredth of a percentage point.
“This is a welcome move by NHB,” said R Nambirajan, managing director at DHFL Vysya Housing Finance, which is mostly active in South India, especially Tamil Nadu.
“We have applied for Rs 25 crore refinance limit from NHB,” Nambirajan told ET.
Housing finance companies normally charges anything between 9.5 per cent and 11.5 per cent for loans to build low-cost dwelling units.
“Refinance under the scheme will be given only in respect of loans where the rate of interest charged from the ultimate beneficiary does not exceed 8.50 per cent per annum,” NHB said in a note to HFCs.
The concessional interest rate will be applicable of loans up to Rs 10 lakh, disbursed on or after December 1 and the scheme will remain valid till June 30, next year.
Torrential rains in several parts of Tamil Nadu have resulted in destruction of property displacing large number of people. Rebuilding of the ravaged dwelling units and rehabilitation of the affected people will be a mammoth task. Refinance under the scheme will be available for a period not less than three years and not exceeding seven years. The interest rate will remain fixed for the entire tenure of refinance without any reset.