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Covid-19 has made each and everyone in huge losses whether it’s mentally, physically or financially. Businesses were shut for past few months and pandemic had leads to breakdown of economy at large. People are affected at large due to this and government understands each and everything. So to lower down the tensions RBI has revised the home loan rates. People those who want to borrow higher amount of loan i.e. above 75 lakh would be benefited by RBI. This has been done to attract more and more buyers and rationalize risk weightage. This is a very positive news for all real estate developers because most of the units these days in the top cities are above 70 lakhs categories.
Keki Mistry, vice-chairman and CEO, HDFC, said the right decision has been taken by RBI because risk depend upon amount of equity. “What seems to have been done is that the cap on amounts have been removed, and therefore, everything is linked to the LTV ratio which makes housing loans much safer,” wording by him.
Siddhartha Mohanty, MD & CEO, LIC Housing Finance, also lighted his statement and views on this decision by RBI, expecting 30% to 40% growth in Q3 may happen from mid and premium segment in top seven metro cities.”
This is because now focus can be shifted from higher caps instead of affordable housing.
RBI governor Shaktikanta Das said, the economy is completely interlinked with each other and everything has to be managed accordingly because real estate sector need recovery and directly or indirectly this will help in growth of economy. To rationalize the risk weights linking is been done with loan-to-value (LTV) ratios for all new housing loans sanctioned up to March 31, 2022″.. The governor added that such loans shall attract a risk weight of 35% in cases where LTV is less than or equal to 80%, and a risk weight of 50% where LTV is more than 80% but less than or equal to 90%. Presently risk is dependent on amount of loan and LTV but from now it has been changed and only linked to LTV. Till now, loans up to Rs 30 lakh with LTV for less than 80% had a risk weight of 35%. Loans up to Rs 30 lakh with LTV of more than 80% but less than 90%, the risk weight was 50%. For loans of above Rs 30 lakh and up to Rs 75 lakh with LTV of less than 80%, the risk weight was 35%. For loans above Rs 75 lakh with LTV of less than 75%, the risk weight was 50% but now the risk weight for all home loans with an LTV of 80% or less has been set to 35% and the risk weight for all home loans with an LTV between 80% and 90% has been set to 50%. By this decision developers are very much excited, according to Kamal Khetan, chairman and managing director, Sunteck Realty, the measure would provide a boost to the ongoing projects and inventory pick up for luxury developers. “The home buyers across all price-points will be able to access more capital with ease. Additionally, it would help the lender on the capital adequacy front and enable them to provide more loans. We expect the RBI to extend the measure beyond March 2022 in the coming days,”
Jaxay Shah, national chairman, Credai, said, “The standard provision of 0.25% will now not be applicable which in turn means that risk provision of housing loans will now be lesser by 0.25%.
Krishnan Sitaraman senior director, Crisil Ratings, observed that liberalization in risk weights for individual housing loans by removal of ticket size criteria and linking it only to LTV will provide some tailwinds to housing loan disbursals from a supply side perspective. “It will bring about greater capital efficiency for lenders in housing loan disbursals of more than Rs 75 lakh ticket size. At the same time, the potential for any material uptick appears subdued as that will depend upon pick up in real estate sales and demand increase for home loans from home buyers,” said by Krishnan Sitaraman
Reference: https://www.msn.com/en-in/money/personal-finance/want-to-buy-your-dream-home-rbi-makes-high-value-home-loans-possible-at-lower-rates/ar-BB19SzXS?ocid=msedgdhp
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