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).
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