NHB index needed for floating rates in home loans
Nachiket Mor, central board member of RBI suggested the National Housing Bank (NHB) to work on a benchmark index for floating interest rates in housing loans. He also said that such indexes could result in the expansion of unoriginal market based on it. He also added that the indexes must be customer oriented. He also mentioned that these days there are no standard indexes. He indicates that the need for consistency, clarity and standardization in the rates is important for attracting the customers.
If the NHB generates such an index, it could cause the housing regulator to play larger role, where even banks with floating interest rate home loan will follow it.
Mr. Mor also says that if floating rates increases, the customer will not able to pay interest amount.
It is important for those who take loan to give NHB an explanation on the topic why floating rates are better for some customers and why it was offered to them and whether due process was followed.
RV Verma, MD NHB says that it is not possible to accommodate all in the same index at same time. The organization has to develop a level where there are many players of same or less size, following which such index can be developed.
Source: The Financial Express
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