Posts Tagged ‘Builders’

Banks Appease Home Loans with Festival Offers :)

Banks appease home loans with festival offers

Banks appease home loans with festival offers

Banks are coming out with festival schemes on home loans ahead of Diwali.

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The move is aimed to increase credit demand.

Meanwhile, deals include teaser rates for initial years, amid some lenders providing alternative to shift to either fixed or floating rates in following years.

Lenders like Canara Bank, Bank of Maharashtra (BoM) and Dena Bank are offering fixed-rate loans for the first five years, and afterward, linking the loans to their prime lending rates.

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However, others like Bank of India are offering fixed-rate loans for the first two years.

Besides, SBI is offering fixed rates for the first three years.

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Moreover, the competition to gain market share has resulted in a small price war.

Development Bank of Credit introduced a fixed rate of 7.95 per cent for the first year, which is the lowest for the first year, in any case. From the second year onwards, the home rates will be linked to floating rate loans.

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BoM and Dena Bank offer a fixed rate of 8 per cent for loans up to Rs 30 lakh in the first two years.

Canara Bank offers 8 per cent in the first year for Rs 30 lakh and SBI offers 8 per cent for the first five years for loans up to Rs 5 lakh.

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Summer sales during the existing year were flat due to uncertainties.

Now, builders and lenders are making a fresh pitch to push sales during Diwali through limited period offers.

Most banks have also waived off the processing fee during the festival season.

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Buying your own home is more affordable now :)

Buying House

Buying your own home is more affordable now than it has been in the last four years.

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The average price of a house is around 4.5 times the buyers’ average annual income, against 4.6 times in 2005.
In 2007, the affordability factor had increased to 5.1% due to a sharp rise in real estate prices.

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However, with the prices of new houses dropping by around 30%, the number of years’ income required to buy a house has come down to 4.5 times.

Developers have also realized the need to introduce affordable housing and are reducing the size of dwellings and omitting amenities like Italian marble and modular kitchens, which drive up costs, in a bid to cater to the huge untapped demand.

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Housing finance major HDFC calculates the ‘affordability factor’ based on the data of its home loan borrowers.
At 4.5 times of annual income, the average EMI would be around 50% of a buyer’s income.

In the home loan market, it is considered within the affordable range.

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With interest rates also softening in the last six months, demand has got a further boost. 🙂

Improved affordability seems to be translating into better sales.
In this quarter, housing finance firms have seen a good increase in demand compared to the previous one, ie January to March 2009.

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With affordability factor in buying houses improving, demand for home loans have also increased.

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