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Topic : What one should know about Home loans
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Will 'base rates' give a fillip to home loans?

Created by : Swati Raut, Product Manager, Aviva  | 07 02 2010 07:35:52 +0000
Industry : BankingFunctional Area : Equities(Markets)
Keywords : home loans base rates
Activity:  678 views;  last activity : 07 06 2010 20:18:09 +0000

The 'benchmark prime lending rate' (BPLR) marked the upper limit of interest rates in home loans. The new 'base rate' regime, which was implemented from July 1, marks a switch to the other end of the spectrum, namely, the lowest interest rate. For a home loan customer, this translates into knowledge, in terms of the lowest interest rate at which s/he is likely to get a home loan.

http://www.csc.gov.sg/html/Newsletter/apr2006/pictures/home.jpg

However, this does not mean that home loans will be available at the base rate. The switch to base rate, from BPLR, is expected to bring greater transparency into the banking system, which will let a loan borrower know how the bank rates him/her as a credit risk. If the base rate is eight and you get a home loan at 12%, you automatically understand where you stand as a credit risk, vis-a vis your lender.

So users, do you you think the 'base rates' give a fillip to home loans?

  
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These rates will continue to remain, except that now they would be defined as certain basis points above the base rate. For new home loan customers, some banks could lend close to their base rates, thereby making home loans cheaper, by 50 to 100 basis points
By Swati Raut, Product Manager, Aviva  07 02 2010 07:35:52 +0000
 
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Base will bring bit of transparency in interest rate made applicable to retail customers. Secondly it will curb cross subsidization of cost of fund among the different category of customers. However I strongly feel the retail customer will not benefit much due to application of base rate.
By Mahesh H., Assistant Professor, Vishwakarma Global Education  | 07 05 2010 07:51:56 +0000
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While accepting your view point, Ms.Swathi Raut, there will be a shift in accordance with the rules & regulations of different lending Banks. Moreover, If RBI takes some measures to control inflation, what will the lending Banks do. Any how let us hope for the best.


By NATTERAJA R. ARIKRISHNAN, GM-Projects, Bentec Electricals & Electronics Pvt. Ltd  | 07 03 2010 19:03:01 +0000
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PEOPLE GOING TO THE BANK FOR HOME LOANS WANT ONLY  THE AMOUNT THEY EXPECT AS SOON AS POSSIBLE FROM THE BANK, AND THE RATE OF INTEREST IS NOT GIVEN MUCH PRIORITY AS LONG AS THERE IS NOT A VERY BIG DIFFERENCE.
By s.baalu , Consultant, XYZ LTD  | 07 02 2010 13:49:15 +0000
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I dont agree for flipping of Home loans...

I had some different Reasons for it also....

beside the Base rate... the demand supply gap as well Rates of real estates also plays a Important role for coming to any conclusion....

Looking at the market.. the Individuals are more concentrating on savings and retaining the Money instead of Investing into Real estate.. we have just come out of slow down which in turn has changed the angle of individuals...

Some banks may continue attracting morecustomers to Opt for Home loans but still matter remains with the demand as Necessity and Investment attracting proposition...
By Sampanna Shastry, Deputy Manager- Marketing & Sales, Arani Power Systems Ltd  | 07 02 2010 08:56:08 +0000
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To a very large extent, things will remain unchanged. The next quarter might see home loan rates rise in sync with the fiscal policies of the RBI, which will have to target rising inflation. On a macro level, this will have an impact on the home loan giver, but at the micro level, for the loan applicant, things will just be a bit more transparent. Most of the banks have provided home loans anywhere between 100 to 250 basis points below their PLR, explains Vishal Ratanghayra, director, Signature India, an asset management company.
By Rashmi Chawla, Cust. Service Manager, Leading Bank  | 07 02 2010 07:52:17 +0000
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