Real Demand - Banks Can Do More
HT Estates, February 28, 2009, Page 1
People in realty sector are of the view that more is needed from other banks
Cost is the factor: "Despite cuts by SBI any borrower should factor in the cost of shifting a loan, as he will have to pay a penalty on pre-payment and a processing fee on the new loan. Also, the rate given by SBI is valid for only one year after which it can be reset to the market rate. The other banks may also revise their rates downwards in the future, so these costs have to be kept in mind before one moves to a PSU bank. The effect of this rate cut has been dampened due to the uncertainty in the minds of the buyers regarding the economic situation. The developers will have to cut prices to attract more buyers as the market is lacking the strong impulse which can force the buyers to start doing transactions again," says Anshul Jain, CEO - India, DTZ International Property Advisers.
Economic scenario the dampener: "Following the RBI's cut of major policy rates like repo rates, most banks were pressed by the Government to pass on the benefits to customers. The SBI's recent rate cut to 8 per cent for new home loan customers is one such example, the other public sector banks are also expected to follow suit. While this may see a marginal shift of customers to PSU banks in the immediate future, private banks are likely to follow suit if they see a positive trend in the customer's reaction to such rate cuts. However, the overall economic scenario is likely to act as significant dampener to new home buyers than rate cuts which are likely to impact only in the short run," feels Rajiv Sahni, Partner, Real Estate Practice, Ernst & Young.
More flexibility needed: Abdul Bari, Senior VP (Marketing and sales), Uppal Group, is of the view that the PSU banks are too rigid in their policies and this can stop the home loan borrower from approaching them. "Their paper work is lengthy and services are not up to , the mark. So, PSU banks should improve these aspects to allow borrowers to approach them."
Bari also points out banks should be more flexible in giving loans to the developers. "Earlier, 85 per cent of the home loan used to be given to the developer but now it has become construction-linked. The problem is banks take construction only after the stilt level, and a developer has to bear the cost of land, excavation and the construction of base. This means only developers ¦ with money stay ".
HT Estates, February 28, 2009, Page 1
People in realty sector are of the view that more is needed from other banks
Cost is the factor: "Despite cuts by SBI any borrower should factor in the cost of shifting a loan, as he will have to pay a penalty on pre-payment and a processing fee on the new loan. Also, the rate given by SBI is valid for only one year after which it can be reset to the market rate. The other banks may also revise their rates downwards in the future, so these costs have to be kept in mind before one moves to a PSU bank. The effect of this rate cut has been dampened due to the uncertainty in the minds of the buyers regarding the economic situation. The developers will have to cut prices to attract more buyers as the market is lacking the strong impulse which can force the buyers to start doing transactions again," says Anshul Jain, CEO - India, DTZ International Property Advisers.
Economic scenario the dampener: "Following the RBI's cut of major policy rates like repo rates, most banks were pressed by the Government to pass on the benefits to customers. The SBI's recent rate cut to 8 per cent for new home loan customers is one such example, the other public sector banks are also expected to follow suit. While this may see a marginal shift of customers to PSU banks in the immediate future, private banks are likely to follow suit if they see a positive trend in the customer's reaction to such rate cuts. However, the overall economic scenario is likely to act as significant dampener to new home buyers than rate cuts which are likely to impact only in the short run," feels Rajiv Sahni, Partner, Real Estate Practice, Ernst & Young.
More flexibility needed: Abdul Bari, Senior VP (Marketing and sales), Uppal Group, is of the view that the PSU banks are too rigid in their policies and this can stop the home loan borrower from approaching them. "Their paper work is lengthy and services are not up to , the mark. So, PSU banks should improve these aspects to allow borrowers to approach them."
Bari also points out banks should be more flexible in giving loans to the developers. "Earlier, 85 per cent of the home loan used to be given to the developer but now it has become construction-linked. The problem is banks take construction only after the stilt level, and a developer has to bear the cost of land, excavation and the construction of base. This means only developers ¦ with money stay ".
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