On
the pretext of reducing the interest rates on home loans, Teaser Rates are
back. Housing Financiers follow their
own Prime Lending Rates (PLR) and for this, the Reserve Bank of India (RBI) has
already released the Banks from following the PLR. The RBI announces PLR just
as an indicative level only. Hence, every Bank has its own PLR. According to
Union Budge proposals, the interest rates on home comes under the priority sector
upto Rs.25 lakhs, for which the Government gives subsidy of 1% through National
Hosing Bank refinancing schemes. For this, the Government had given funds to
National housing Bank and allowed it to raise funds through Capital Gain Tax
exemption bonds.
Now, under these circumstances, the Act of
Banks in reducing the rates is sheer market forces pressures and nothing to do
with the RBI policies and various credit rates by which the RBI controls the
inflation and other currency related issues. DSA’s and Agents of Banks are now cutting
under each other’s Clients because, Real Estate Industry is going through its worst
phase and nothing is moving. Volumes have declined and New Clients are not
entering into it.
To survive in the Housing Finance Market,
the Players are now under-cutting in the name of Teaser Rates. The new reduced
rates are not for existing Clients. Under floating rate options, the Borrower
must get the advantage of reducing the interest rate but unfortunately, these
reduced rates are not for existing Customers of the Banks, but for the
Customers from either other banks or to the new Customers.
The Foreign Banks are more aggressively
luring the under-cutting by not announcing in the Public. But, their Agents are
active in the market. The first two to three years, leverages are been given
and then again the same old bad practice prevails as to not to give advantage
of interest rate reduction to the Borrower of floating rate housing finance.
No comments:
Post a Comment