Poll indicates RBI policy will increase home sales

The Reserve Bank of India’s move to allow loan-to-value ratio (LTV) of up to 90% for home loans of Rs 30 lakh or less could have a positive impact on home sales, according to a poll conducted by realty media.

Around 53% of the respondents feel the move to increase the loan to value limit on affordable housing will help increase home sales, while 35% of respondents say the move will not have any effect on home sales. About 12% of the respondents say they were not sure of the impact of rise in LTV ratio on home sales.

LTV signifies how much of the property value a bank can lend to a borrower. After this move, borrowers would have to shell out only 10% of the property value and the rest can be financed through banks.

Earlier, customers could get 90% of the property value as loan for amount up to Rs 20 lakh.

Government has been putting a lot of impetus to promote affordable housing recently, with an aim to build 20 million homes by 2022 under its “Housing for All” programme.

A recent report by rating agency Crisil said RBI’s move to lower LTV ratios can help bring down interest rates on home loans by another 25-30 basis points over the next few months.

RBI has reduced policy rates by a total of 125 basis points this year, but the banks have been reluctant to pass on the benefits to the end consumers.

The residential real estate sector has been reeling under prolonged slowdown due to sluggish home sales, costly credit and severe cash crunch, leading to delivery delays. Home sales dropped by 18% over the June quarter, according to a report by property portal.

Article sourced

PS: We at PropGod have launched Sai Pratham, an affordable villa project, ideal for second/vacation home or senior citizen housing seekers in Whitefield at Bangalore.

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