Realtors hail RBI move to lower risk weightage on home loans

Realtors body CREDAI today hailed the RBI's decision to lower risk weightage on home loans, saying the move would boost housing demand and help in overall growth of the real estate sector.
"While RBI has kept the repo rate unchanged, we welcome their move of softening risk weight on home loans. This measure along with lowered inflation figures as per earlier projection will definitely augur well for the growth of the real-estate sector," CREDAI President Jaxay Shah said.
In what can make new home loans cheaper, the Reserve Bank of India (RBI) today reduced the standard assets provisions on individual housing loans to 0.25 per cent and also lowered the risk weights on such lending.

"As a countercyclical measure, the LTV (loan to value) ratios, risk weights and standard asset provisioning rate for individual housing loans" have been reviewed from today, the RBI said in the second bi-monthly policy statement.
The standard asset provisions, or the amount of money to be set aside for every loan made, has been lowered to 0.25 per cent from the earlier 0.40 per cent, which will help reduce the interest rates on home loans.
It also eased the risk weights for certain categories of loans, which will help banks on the capital adequacy front, and enable them to make more loans.

The risk weight for individual housing loans above Rs 75 lakh has been reduced to 50 per cent from the earlier 75 per cent, while for loans between Rs 30 and Rs 75 lakh, a single LTV ratio slab of up to 80 per cent has been introduced with a risk weight of 35 per cent.

Knight Frank India CMD Shishir Baijal Chairman and Managing Director said: "Considering the benign inflation numbers we expected the Reserve Bank of India (RBI) to adopt a growth-inducing dovish monetary policy unlike its hawkish stance witnessed in the previous review."
Anshuman Magazine, Chairman - India and South East Asia, CBRE, said the reduction in the statutory liquidity ratio (SLR) would help provide more liquidity to banks.

"This could prove beneficial for prospective home buyers with the expectation that lending institutions could further lower the interest rates on loans," he added.
SARE Homes MD Vineet Relia said: "Even though RBI has left repo rate untouched, home loan rates are anticipated to come down if one were to go by the present trend. A slight reduction in SLR is also expected to have a favourable impact on home loan rates.