LICHF slashes home loan rates by 0.5%

LICHF slashes home loan rates by 0.5%
The Financial Express, August 15, 2009, Page 11

By ugesh sarkar, Section Real Estate

LIC Housing Finance on Friday cut interest rates for new loans by 0.5% effective from August 1, even as LICHFL director and chief executive RR Nair said in Chennai on Friday that the firm would mobilise funds through non-convertible debentures (NCDs) and term loans to disburse loans worth around Rs 15,000 crore this year.

With the cut, for customers opting for floating rate loans between Rs 30 lakh and Rs 75 lakh, the new rates would be 8.75% as against 9.25%. For three-year fixed or floating scheme loans between Rs 30 lakh up to Rs 75 lakh, the new rate will be 8.90% against 9.5% earlier, a company press release said. "The decision has been taken in view of the prevailing market conditions," an LICHF official said.

Country's premier home loans lender, HDFC, has also cut interest rates on loans between Rs 30 lakh-Rs 50 lakh by 0.50% from August 12. The new rate accordingly stands at 9% from the earlier 9.5%, an HDFC source said. For loans up to Rs 15 lakh, the rate remains unchanged at 8.75% and for loans between Rs 15-30-lakh, the rate remains at 9%, sources said.

Speaking in Chennai, Nari said, "The liquidity is good and this year we want to raise Rs 15,000 crore. Already, Rs 6,000 crore has been raised," adding that the company would not opt for external commercial borrowings (ECBs) as there was adequate liquidity. The company had disbursed Rs 8,000 crore loans last year. "I believe reaching the target will not be a difficult task," he said after inaugurating a property fair.

Nair said the real estate sector has started to look up after being in lull owing to slowdown in the economy. Pointing out that there has been a great demand for dwellings across the country, he called on the real estate developers to seize the emerging opportunities. The supply-demand mismatch is alarmingly high and LICHL are gearing up to help out the end-users in order to narrow the gap. Nair said LICHFL would not be entering into reverse mortgage portfolio unless products are suitably redesigned. "Reverse mortgage system, at times, leads to senior citizens getting evacuated from their home at the fag end of their life," he said.