The Hindu Business Line : Affordable homes: Will builders match Govt’s moves?

Mumbai, Dec. 10 Top bankers from State-owned banks will be going into a huddle on Thursday in New Delhi to discuss the nitty-gritty of the “home loan package” which the Government wants them to announce.

While banks are ready to do the Government’s bidding in this regard, bankers wonder what “sacrifice” the builders will make in terms of bringing down the prices of residential properties to make the package workable and housing affordable for the “common man”.

“Builders have jacked up residential property prices by anywhere between 80 and 100 per cent over the last couple of years. If the Government wants, we will cut interest rates and make do with the interest rate subvention. But will the builders do their part by reducing prices of residential properties?” said a top official with a State-owned bank.

Loan rates

The banker averred that there was barely any room for reducing home loan rates further. While they are presently earning around 10 to 10.25 per cent interest on floating rate home loans, they are paying out 9.5 per cent interest on term deposits.

“Interest rate is but a small issue, the bigger issue is property prices,” said a banker with another public sector bank.

Builders should not only consider bringing down prices further but also pick up the tab for term insurance of the borrower, he said.

Banks are expecting the Government to pitch in with an interest rate subvention of two to three per cent so that the end-user can avail himself of home loans at around seven to eight per cent.

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