State Bank of India (SBI) has lowered the interest rate on home loans which is bringing growth in its home loan portfolio when the sky-rocketing real estate prices have slowed the credit demand. Though the demand for fresh loans for buying houses is growing at slow pace, buying out other banks’ home loans is helping the public sector bank to strengthen its home loan book.
“There is a slowdown in personal loans, though it is not a steep decline. We are giving personal loans to eligible persons. But the growth in home loans is marginally better than same period last year,” SBI deputy managing director (national banking) Sitaramam Komaragiri told reporters on the sidelines of launching the Mastercard & SBI money transfer facility.
Komaragiri told news person that the bank’s festival offer of lower interest rates on retail loans is in progress till the end of this month. People are buying houses, but he did not specify the growth rate in the home loan segment.
Another senior SBI executive said, “Our lending rates for homes are lower by 100-200 basis points compared with competitors, especially private banks. Our rates are between 10-11 per cent, while others charge 12-13 per cent.”
Though the bank’s cost of funds is low at 5.5 per cent, but it is still able to make profits. Because of its low costs the bank is able to finance borrowers who have taken home loans from other banks.
State Bank of India’s outstanding home loan portfolio grew by 18.04 per cent year-on-year to touch Rs 40,807 crore. It added loans worth Rs 2,825 crore in April-September 2007. The asset quality is under control, according to a presentation made to analysts.
Whereas the bank advances in the personal segment has gone up by Rs 11,962 crore (18.18 per cent year on year basis) at the end of September 2007. The outstanding personal segment advances aggregated Rs 77,772 crore.
The retail advances has constituted 24.82 per cent of the gross domestic advances as at the end of the September quarter. Housing loans constitute 52.47 per cent of the bank’s retail advances.
Wednesday, December 12, 2007
Monday, December 10, 2007
Big players compete for home loan segment
Improvement in middle class income and housing shortage prompted race in home loan segment.
Big groups of foreign and domestic players are entering the mortgage finance market and competing for a share of the strong home loans segment.
The major companies including US-based E*Trade (through IL&FS Investsmart), AIG, India Infoline, Mahindra & Mahindra Rural Housing Finance, DBS Chola, Fullerton India, Barclays Finance and Societe Generale, among others.
According to experts there is rapid growth in the mortgage sector along with the 10th Five-Year Plan, it is being anticipated that there will be a shortage of 22 million dwelling units, which is attracting these big groups, to finance the Indian middle class to fulfill their dreams of owning residential property.
Most global players are making there way in home loan segments through the acquisition route — Barclays bought Chennai’s Rank Investments, AIG bought Weizmann Homes, E*Trade bought into IL&FS Investsmart — while others are entering the home loan market through joint ventures. For instance, BNP Paribas formed a joint venture with Sundaram Home Finance and Societe Generale forged a tie-up with the Apeejay group.
Recently, India Infoline received $77 million (Rs 300 crore) from emerging markets expert Richard Chandler’s Orient Global, a part of which will be utilized for India Infoline Housing Finance “to provide support for the growth of housing for the Indian middle class”.
At present the market size of housing finance is anticipated to be close to Rs 1,50,000 crore, which accounts for only 30 per cent of the total market requirement (this is the formal sector).
There are around 42 players in the home loan segment, of which only seven are very active, including HDFC, LIC Housing, GIC Housing, Dewan Housing, Can Fin Homes, Gruha Finance, PNB Housing Finance and Hudco.
IL&FS Investsmart MD and CEO Leslie Whiteford in an interview given to Business Standard last week said, “We already have a non-banking finance company license and we will focus in the area of financing the customers’ needs and mortgages.”
Housing finance institutes come under the regulation of National Housing Bank (NHB). A senior executive of NHB said that they will allow stable players who have proper procedure of disciplined lending to tap the domestic market.
“We are looking at stable players with disciplined lending. The market should be served in a sustainable manner as the size of the market is huge and still quite under-penetrated,” he said.
Market players said there are good prospective in the mortgage segment, which is attracting a lot of new players into the segment.
In the long run players might keep 70 per cent of the risk in their books and will offload the rest 30 per cent in the market.
Big groups of foreign and domestic players are entering the mortgage finance market and competing for a share of the strong home loans segment.
The major companies including US-based E*Trade (through IL&FS Investsmart), AIG, India Infoline, Mahindra & Mahindra Rural Housing Finance, DBS Chola, Fullerton India, Barclays Finance and Societe Generale, among others.
According to experts there is rapid growth in the mortgage sector along with the 10th Five-Year Plan, it is being anticipated that there will be a shortage of 22 million dwelling units, which is attracting these big groups, to finance the Indian middle class to fulfill their dreams of owning residential property.
Most global players are making there way in home loan segments through the acquisition route — Barclays bought Chennai’s Rank Investments, AIG bought Weizmann Homes, E*Trade bought into IL&FS Investsmart — while others are entering the home loan market through joint ventures. For instance, BNP Paribas formed a joint venture with Sundaram Home Finance and Societe Generale forged a tie-up with the Apeejay group.
Recently, India Infoline received $77 million (Rs 300 crore) from emerging markets expert Richard Chandler’s Orient Global, a part of which will be utilized for India Infoline Housing Finance “to provide support for the growth of housing for the Indian middle class”.
At present the market size of housing finance is anticipated to be close to Rs 1,50,000 crore, which accounts for only 30 per cent of the total market requirement (this is the formal sector).
There are around 42 players in the home loan segment, of which only seven are very active, including HDFC, LIC Housing, GIC Housing, Dewan Housing, Can Fin Homes, Gruha Finance, PNB Housing Finance and Hudco.
IL&FS Investsmart MD and CEO Leslie Whiteford in an interview given to Business Standard last week said, “We already have a non-banking finance company license and we will focus in the area of financing the customers’ needs and mortgages.”
Housing finance institutes come under the regulation of National Housing Bank (NHB). A senior executive of NHB said that they will allow stable players who have proper procedure of disciplined lending to tap the domestic market.
“We are looking at stable players with disciplined lending. The market should be served in a sustainable manner as the size of the market is huge and still quite under-penetrated,” he said.
Market players said there are good prospective in the mortgage segment, which is attracting a lot of new players into the segment.
In the long run players might keep 70 per cent of the risk in their books and will offload the rest 30 per cent in the market.
Saturday, December 8, 2007
Hyderabad is a potential market for real estate
Australia-based non banking firm Wizard and GE Money in a joint venture have launched Wizard Home Loans. By the middle of 2008 they are planning to expand their operations to six major cities.
“We want to become the most-preferred home loan provider in India with highly competitive pricing” Egisto Franceschi, Chief Executive Officer, Wizard Home Loans, told newspersons at the launch of operations here on Thursday.
The firm had appointed A.C. Neilsen to study Indian home loan market so that it becomes easy for them to understand the consumer’s preferences. “The study shows that the consumers want, mortgage expertise, competitive pricing and personalized service, among others. Our business model (on franchisee basis) has all these offerings,” he said.
According to the research Hyderabad is a potential market for real estate. “In view of this, we have chosen Hyderabad as the second city to launch operations,” he added. The firm launched its operations in Delhi in September 2007. For the expansion six cities were identified. The company has priced its home loans at 9.99 per cent (on floating basis).
“We want to become the most-preferred home loan provider in India with highly competitive pricing” Egisto Franceschi, Chief Executive Officer, Wizard Home Loans, told newspersons at the launch of operations here on Thursday.
The firm had appointed A.C. Neilsen to study Indian home loan market so that it becomes easy for them to understand the consumer’s preferences. “The study shows that the consumers want, mortgage expertise, competitive pricing and personalized service, among others. Our business model (on franchisee basis) has all these offerings,” he said.
According to the research Hyderabad is a potential market for real estate. “In view of this, we have chosen Hyderabad as the second city to launch operations,” he added. The firm launched its operations in Delhi in September 2007. For the expansion six cities were identified. The company has priced its home loans at 9.99 per cent (on floating basis).
Wednesday, November 28, 2007
In home loan list the small towns and NCR at the top
It is the smaller cities in India not the metros that are witnessing a housing boom. In quiet Gangtok every fourth household took a housing loan from a scheduled commercial bank in 2005-06, In Bhubaneshwar over one-fifth of all homes took the housing loan in the same year.
On an average of barely Rs 3.4 lakh per housing loan is being taken by Sikkimese. Though Sikkimese capital may not be able to match the residents of the metros in case of the size of the loan but in terms of the sheer proportion of families that are borrowing to have a home they can call their own, small-town India is on the march.
Amongst the metros Mumbai tops the list in terms of the value of housing loans, with a little under Rs 24,000 crore in 2005-06, according to the details data available of the latest year. Delhi comes next with over Rs 16,000 crore, followed by Bangalore with over Rs 14,000 crore, Chennai (a little more than Rs 10,000 crore) and Hyderabad (over Rs 7,000 crore). The metros are topping the list without including suburban districts like Thane and Thiruvallur.
How you rank the cities in terms of their inclination for housing loans will wholly depend on the parameter you choose — the volume of loans, the value of each loan, the proportion of households that borrowed or the average borrowing per household.
On looking at the average value of each loan account opened in 2005-06 the list changes with the immediate neighbors crawling to the top of the chart leaving behind the metros. Noida now tops the list with Rs 10.5 lakh followed by Gurgaon with Rs 10.2 lakh and Delhi with Rs 9.8 lakh. Mumbai, with an average housing loan of Rs 7 lakh, is now at eighth place.
Even on looking in terms of the average housing loan per household the list changes. Noida and Gurgaon remain on top with Rs 1.49 lakh and Rs 1.29 lakh respectively, but Chandigarh and Chennai, with an average of just over Rs 1 lakh, are now joint third while Delhi slips to No 17 with Rs 0.49 lakh.
On an average of barely Rs 3.4 lakh per housing loan is being taken by Sikkimese. Though Sikkimese capital may not be able to match the residents of the metros in case of the size of the loan but in terms of the sheer proportion of families that are borrowing to have a home they can call their own, small-town India is on the march.
Amongst the metros Mumbai tops the list in terms of the value of housing loans, with a little under Rs 24,000 crore in 2005-06, according to the details data available of the latest year. Delhi comes next with over Rs 16,000 crore, followed by Bangalore with over Rs 14,000 crore, Chennai (a little more than Rs 10,000 crore) and Hyderabad (over Rs 7,000 crore). The metros are topping the list without including suburban districts like Thane and Thiruvallur.
How you rank the cities in terms of their inclination for housing loans will wholly depend on the parameter you choose — the volume of loans, the value of each loan, the proportion of households that borrowed or the average borrowing per household.
On looking at the average value of each loan account opened in 2005-06 the list changes with the immediate neighbors crawling to the top of the chart leaving behind the metros. Noida now tops the list with Rs 10.5 lakh followed by Gurgaon with Rs 10.2 lakh and Delhi with Rs 9.8 lakh. Mumbai, with an average housing loan of Rs 7 lakh, is now at eighth place.
Even on looking in terms of the average housing loan per household the list changes. Noida and Gurgaon remain on top with Rs 1.49 lakh and Rs 1.29 lakh respectively, but Chandigarh and Chennai, with an average of just over Rs 1 lakh, are now joint third while Delhi slips to No 17 with Rs 0.49 lakh.
Monday, November 26, 2007
You can sell existing house stilling having home loan on it
The financial status of the people has improved. With the improvement in the financial status the mind set of the people has also changed with time. Now people think about investing their money, buying insurance policies, etc.
Before and now also most of the people are still interested in investing money in property like buying plots or house. Many builders have come up and are building apartments in and around the states so the people have choice to buy house in the other place or shift to a bigger house in a better locality.
If you want to move to a bigger house you have a choice either to retain it or sell it. If you have enough money to buy another, bigger house then you can retain it. But for many, this may not be viable. You may need to sell the existing house to fund the new, bigger house. As you had funded your first house with a home loan and still have 7 or 15 years to go before completing the payment, a question arises: Can you sell your existing house that still has a home loan on it?
The answer is yes, you can for this home loan lender’s consent is needed. It is not difficult to obtain that. You can consult the bank for this as every bank has a clearly laid out process to help you sell your home with the loan. With the consent letter you will be able to start negotiation for the sale of your house. The buyer to your house will need to pay directly to your lender bank the outstanding loan amount and the bank will release the lien on your house. Here is step-by-step procedure to help you on how to sell your house with a loan:
Step 1
Tell your lender bank about your requirement and request them to issue a consent letter to you. The consent letter will normally provide the amount, on payment of which the outstanding loan will be fully paid off along with the other details.
The amount mentioned in the letter includes the prepayment charge, if any, chargeable by your bank and should list the documents held by them that will be released on payment of the stated amount. This amount mentioned in the certificate is typically calculated as on a future date, to enable time for the buyer to arrange the payment.
Step 2
Based on this certificate, you can negotiate the sale of your house with potential purchasers.
If the new purchaser takes the loan from your existing bank, the process is far simpler than if he were to take the loan from another bank, which may need the title deeds in its hands before it agrees to release payment.
In case the purchaser is not taking any loan and is making an outright payment, the new purchaser can make a cheque favoring the bank for an amount equivalent to the amount stated in the certificate. This will clear your home loan. For the balance amount, he will provide a cheque in your name. Your property documents will be released to the buyer only when you have prepaid your entire housing loan.
Before and now also most of the people are still interested in investing money in property like buying plots or house. Many builders have come up and are building apartments in and around the states so the people have choice to buy house in the other place or shift to a bigger house in a better locality.
If you want to move to a bigger house you have a choice either to retain it or sell it. If you have enough money to buy another, bigger house then you can retain it. But for many, this may not be viable. You may need to sell the existing house to fund the new, bigger house. As you had funded your first house with a home loan and still have 7 or 15 years to go before completing the payment, a question arises: Can you sell your existing house that still has a home loan on it?
The answer is yes, you can for this home loan lender’s consent is needed. It is not difficult to obtain that. You can consult the bank for this as every bank has a clearly laid out process to help you sell your home with the loan. With the consent letter you will be able to start negotiation for the sale of your house. The buyer to your house will need to pay directly to your lender bank the outstanding loan amount and the bank will release the lien on your house. Here is step-by-step procedure to help you on how to sell your house with a loan:
Step 1
Tell your lender bank about your requirement and request them to issue a consent letter to you. The consent letter will normally provide the amount, on payment of which the outstanding loan will be fully paid off along with the other details.
The amount mentioned in the letter includes the prepayment charge, if any, chargeable by your bank and should list the documents held by them that will be released on payment of the stated amount. This amount mentioned in the certificate is typically calculated as on a future date, to enable time for the buyer to arrange the payment.
Step 2
Based on this certificate, you can negotiate the sale of your house with potential purchasers.
If the new purchaser takes the loan from your existing bank, the process is far simpler than if he were to take the loan from another bank, which may need the title deeds in its hands before it agrees to release payment.
In case the purchaser is not taking any loan and is making an outright payment, the new purchaser can make a cheque favoring the bank for an amount equivalent to the amount stated in the certificate. This will clear your home loan. For the balance amount, he will provide a cheque in your name. Your property documents will be released to the buyer only when you have prepaid your entire housing loan.
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