Posts Tagged ‘EMI’

Interest Rates War Heating Up,Home Loans Rates Down!

An interest rate war led to the dip in home loan rates

An interest rate war led to the dip in home loan rates

An interest rate war is brewing in the home loans this festive season.

Development Credit Bank (DCB) and GIC Housing offering home loans below the psychological 8%.


DCB, which recently entered the segment, is offering home loans at 7.95% for loans up to Rs 5 crore at fixed interest rate for the first year and floating rates from year two.

Affordable housing is the buzzword these days, but the market would get a further boost if attractive financing options are available.

Therefore, bankers have started coming up with the attractive options for their target segments.

Central Bank of India and PNB have waived processing fee and documentation charges on certain loans.


Bankers have basically started offering a psychological pricing to get more borrowers into their fold.

According to bank observers, borrowers have started preferring low interest bearing home loan accounts of nationalised banks over private banks.

However, private sector bankers maintain that borrowers should not fall flat over the sub 8% schemes and exercise caution before signing on the dotted line.

As well as borrowers also say that such switch over is not easy.

Half way through EMI repayments, it is getting quite impossible for borrowers to get their account Shifted.

Constraints like, paying a hefty penalty and transfer fees are proving to be deterrents for them.


Interest Rate War is really heating up coming Diwali. 🙂

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.


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.


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.


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.


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.


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