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Mumbai , Nov. 22

MR Deepak Parekh, Chairman of Housing Development Finance Corporation, said today that home loan customers should be more `long-sighted' and `have a longer-term vision' as far as interest rates are concerned.

The Chairman of the 26-year-old housing finance institution which has over 40 per cent market share, said, "Over 99 per cent of our home loan customers are going in for floating rate loans. When rates are low, as it is today, people should lock into fixed rate loans of 15-20 years." At present even a 20-year home loan is available at a fixed rate of 8 per cent.

"Our country is yet to experience the cyclical movement of interest rates and we should be prepared for it. This is going to happen in the near future," he added.

Mr Parekh was indicating that the interest rates, which are very low at present, would one day go up since interest rates are cyclical in their movement. Mr Parekh was addressing a gathering of common investors at the `Investor Mela' organised by Investor Grievances Forum here.

"When there is a blip in interest rates, we will see everyone come back to us to shift from floating to fixed rate loans. Customers have to be long-sighted and have longer-term vision."

Interest rates are the lowest in 48 years both in the US and the UK. In India, too, soft interest rates are here to stay, said Mr Parekh, with the Reserve Bank of India and the Government reiterating a soft interest rate stance. Interest rates in India are likely to stay soft, as the two determinants of interest rate, inflation and liquidity, are both stable with inflation low and liquidity in plenty.

He urged investors to grab Government's savings schemes soon before the rates come down further. Schemes such as the RBI Relief Bonds and the Public Provident Fund yield comparatively higher returns than bank deposits today.

As far as equity investments are concerned, Mr Parekh advised the common man to rely on experts and discouraged him from entering the market on his own. He urged investors to go to mutual funds for the same. In the US individuals hold not more than 5 per cent of shares in companies whereas in India the public holding is higher at 10-20 per cent, he said.

Article E-Mail :: Comment :: Syndication

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