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Realty downturn has severe affect on housing finance

From last couple of months real estate market has witnessed of slowdown lesser sales in residential projects as well as commercial properties. The home loan borrowers are consistently witnessed of rising EMI payments. When slowdown graph headed upward then simultaneously housing finance rates goes up too. Vice a versa the inflation rate comes down, borrowers get some relief as their repayment burden also eases.
Inflation has affected to housing finance companies (HFC) harshly it is reflecting as biggest money lenders such as ICICI, HDFC and SBI has taken the several robust steps to retain home loan borrowers. The HFC’s has taken the steps such as
  1. Waived off the pre payment charges on floating home loan.
  2. SBI waived off half processing fee on home loans.
  3. Launched the dual-rate housing loan scheme
Whereas, Banks are expecting a massive fall in property prices, and have withdrawn prepayment charges to enable those who are on shaky wicket. Besides, this was an order of RBI to not charge prepayment charges. The big worry of banks today is housing loan default, which has already become 3.4% and will spell a doom if it crosses 5%. Every body knows that property prices are falling, but somehow we do not want to talk about it. The media is also shy. Perhaps, when the bubble bursts comprehensively only will people will come to know that the house the bough for a crore, is now not even worth 55Lakhs.
On the other hand Reserve Bank of India in the previous year has increased the interest rate by 12 times but bank has failed to curb the inflation rate.
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