Home loan demand stagnant, defying RBI rate hike trend due to monsoon

RBI has increased the policy repo rate by 1.4% in the last three monetary policies, taking the rate to 5.4%. In a rate hike scenario, the cost of funds for banks also increases, and hence they impact borrowers. lending rate,

Several major banks and NBFCs have hiked their benchmark lending rates, which are linked to the repo rate, in the last three months. home loan Rates also increase. Equated Monthly Installment (EMI) has also become costlier. However, bank credit growth has continued to pick up despite the rate hike trend.

The latest RBI data shows credit growth of scheduled commercial banks (SCBs) accelerated to 14.2% in June 2022, from 6% a year ago and 10.8% a quarter ago.

According to the Skymet Weather report on Thursday, India received 117% of the rain in July, while the month of August has recorded 111% rainfall so far.

Monsoon in India lasts from June to September. The Skymet report states that the month of June is the least rainy month with an LPA of 165 mm (approximately), followed by 170 mm in September. July and August are the main monsoon months, with LPA of 280 mm and 255 mm (approx.) respectively

According to the report, giving sufficient rainfall in both the main monsoon months is not a common feature. In the last 25 years, on only 4 occasions, during the main monsoon months, rainfall exceeded 100% of the LPA. Another estimate during such events is a ‘normal’ or ‘above normal’ monsoon season for the country, with LPA total rainfall >/= 100%.

How monsoon accelerates home loan demand

According to Ravi Subramaniam, MD and CEO, Shriram Housing Finance, agriculture-majority states like West Bengal, UP, Punjab, Gujarat, Haryana and Madhya Pradesh have high positive impact on rainfall, thus a good monsoon will help in increasing their per capita income. helps. This in turn increases the demand for necessities like housing in these small towns. Agriculture provides livelihood to about 58% of India’s population, thus the normal monsoon of last 4 years has had a positive impact on demand in the rural economy.

“The demand and availability of affordable housing has increased in line with the Government of India’s efforts to promote housing for all and the demand for affordable housing loans has had a positive impact. Tier 2 and Tier 3 markets saw strong growth in housing As a result of positive economic drivers and good monsoon in the last 4 years,” he said.

Further, the CEO of Shriram Housing Finance pointed out that the government’s push for affordable housing has given rise to several affordable housing projects in semi-urban and rural areas. Large-scale reverse migration following the COVID-19-led lockdown has led to a lot of people leaving cities to return to their hometowns, meaning rural India has reduced dependence on agriculture for livelihood. Over the years the dependence on monsoon only has reduced with increasing irrigation coverage and non-farm centric development.

Meanwhile, Manish Sheth, MD and CEO, JM Financial Home Loans said, “Monsoon always has a profound impact on the health and growth of India’s agro-based economy. Hence, IMD’s prediction of “above normal” monsoon this year is based on sentiments. in all sections of the society.”

Sheth further said, with the prediction of “above normal” monsoon, especially in the western and southern part of the country, we will see a steady rise in the level of per capita income. With the increasing penetration of affordable housing finance companies in Tier 2 and Tier 3 cities and their ability to measure income, it will pave the way for qualified home buyers to build their dream home.”

Elaborating on the performance of Shriram Housing Finance, which is the 4th largest affordable housing financier in India, Subramaniam said, “Our AUM has grown by 3 times in the last 3 years. 6000 crores today and on an average 60-65% of our home loan disbursement comes from non-metro locations. There has been an increase in the number and value of loan applications from non-metro areas as compared to last year. The non-metro sector contributed 50% to the number of loans disbursed a year ago and today it is around 70%. Our borrowers in rural India depend on a mix of agricultural and non-farm activities. A normal monsoon has a positive impact in our major states of Andhra Pradesh, Telangana and Tamil Nadu.”

In the affordable housing segment, Sheth said, “We see a revival in housing demand in Tier 2 and Tier 3 cities as monsoon and farm income are the catalysts for home loan growth. Introduction of village population survey and mapping with improved technology In Village Area (SVAMITVA) scheme and the ongoing remote working trend are also driving the demand for home loans for Tier-2 and Tier-3 markets and beyond.”

Check out some of the latest home loan interest rates from major banks and NBFCs

Shriram Housing Finance:

At Shriram Housing Finance, home loans are offered on from 1 lakh 10 crores with a tenure of up to 25 years. The interest rate starts from 8.9%. Here, the maximum loan that can be taken is up to 90% of the cost of the property.

Bajaj Finserv:

According to the website, home loans for salaried applicants range from 7.70% to 14%. For self-employed applicants, NBFCs charge interest rates ranging from 7.95% to 14%.

LIC Housing Finance:

Earlier this week, LIC Housing Finance hiked its prime lending rate by 50 basis points with effect from August 22. LIC Housing Prime Lending Rate (LHPLR) is now 15.80%.

On home loan, LIC Housing offers . 8.05% interest rate on loans up to 50 lakhs, and on more than 8.25% from 50 lakhs 2 crore for salaried and professionals, whose CIBIL score is greater than or equal to 700 are eligible for these rates.

However, LIC Housing is offering an interest rate greater than or equal to 8% on the home loan 10 lakh with a CIBIL score equal to or above 700.

SBI Home Loan:

From August 15, on regular home loans, SBI levies 8.05% on borrowers whose CIBIL score is greater than or equal to 800. While the rate is 8.15% on a credit score 750-799, the rate is 8.25% on a credit score 650-699, and the rate is 8.35% on a CIBIL score of 650-699.

The bank levied 8.55% on borrowers with credit scores of 550-649. The rate is 8.25% for borrowers with NTC or credit scores of 101-200.

A 0.05% concession is available to women borrowers subject to a minimum EBR, i.e. 8.05%.

HDFC Bank Home Loan Rates:

The largest private lender’s retail prime lending rate (RPLR) currently stands at 16.05%.

on home loan up to 30 lakh, the bank offers 8.10-8.50% interest rate to salaried women and 8.15% to 8.55% to others.

In addition, on home loan from from 30.01 lakh 75 lakhs, the rate is 8.35-8.75% for salaried women and 8.40-8.80% for others. Whereas for salaried women the rate is 8.45-8.85% and for others on home loans above 8.50-8.90%. 75 lakhs.

These interest rates are higher by 10-15 basis points for self-employed borrowers.

ICICI bank home loan interest rate.

Home loan for salaried borrowers to choose 35 lakhs, the bank’s interest rates range between 8.10-8.85%, while the rate is the same on the loans above from 35 lakhs 75 lakhs. However, the rate on loans above this is 8.10-8.95% 75 lakhs.

RR is the lending rate linked to the repo rate.

Whereas, for self-employed borrowers, the private banker charges a rate of 8.20-9% on home loans up to a maximum. 35 lakhs, and more from 35 lakhs 75 lakhs.

However, the rates on loans above this range between 8.20-9.10% 75 lakhs for self-employed.

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