Banks will lend only 80% of Property Price as Home Loan
RBI introduced a ceiling on “loan to value” (LTV) ratio for home loans. The central bank has said that the loan to value ratio for home loans cannot exceed 80 per cent of the value of a house as housing loan.This in effect means that you will have to shell out more from your own savings to buy that house you have been eyeing for a while.
The RBI also increased the risk weightage of loans above Rs 75 lakh taken for buying property, which could increase the interest rates on loans for high-cost properties.The RBI, with a focus on taming the currently rigid high inflation rate in the economy, raised repo rate (the rate at which banks borrow from the RBI) to 6.25% and reverse repo rates (the rate of interest that banks get when they park their surplus money with the central bank) to 5.25%.
The raising of LTV ratio to 80% means that any new home buyer going for a housing loan, will have to bring in at least 20% of the value of the property. It also increased the standard asset provisioning by commercial banks for all housing loans with `teaser rates to 2%. Till now, new borrowers could avail home loans at lower rates of 8 per cent for a fixed number of years.
The RBI measure could also work in favour of home buyers in the form of a either a slow or nil rise in real estate prices.The RBI has clamped down on teaser home loan rates and said that teaser rate loans raise concerns as borrowers may not have the ability to service loans.
- Read More…Times of India
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I must say this will prove to be a good move for everyone in the long term. The rate at which housing rates have been growing has been crazy and needed some regulation. It makes sense to ensure buyer bring something to table while making a huge investment like home.