Wednesday, March 25, 2009

HDFC cuts floating interest rates on home loans

Now, Up to Rs30 lakh - 9.5%

More than Rs30 lakh - 10.5%

Fixed rate loans 14.25%

Retail Prime Lending Rate (RPLR):

India’s largest mortgage lender Housing and Development Finance Corp. Ltd (HDFC) on Tuesday lowered its retail prime lending rate (RPLR) by half a percentage point to 14%.

Floating Interest Rates:

This will affect all its home loans taken on floating interest rates. Benefits from the rate cut will be passed to existing floating rate customers in the next three months, based on reset dates, HDFC said in a statement.

Benefit to existing customers:

The rate cut comes after State Bank of India and ICICI Bank Ltd, the country’s two largest lenders by assets, revised interest rates earlier in March. They, however, did not reduce their RPLRs that would have benefited existing floating rate customers.
To read more, please, visit - Anita Bhoir - livemint.com

Is this going to stop you from 'switching bank'?

True, just because another bank is offering lower rates, it may not make sense to switch. Still, we all know that SBI's low interest rates are threat to HDFC.

Making it expensive for those home borrowers who are choosing to switch or by playing to the gallery by preaching to the builders to reduce the property rates and now cut in floating interest rates for existing customers is not a solution to prevent you from switching. If HDFC wants your business, they must reduce the interest rates and compete with PSU banks. Isn't it? Please, share your views in the comments. Comments Policy

Feel free to call me:

I enjoy talking, sharing my views and giving advice about buying property in Pune real estate market (so, i do not charge anything for the first 5 minutes!) Call +91 98600 44110

Subscribe for Free!

To receive free emails or free RSS feeds, please, subscribe to Ravi Karandeekar's Pune Real Estate Investment Blog

For my blogs on Pune real estate market news, real estate projects near Hinjewadi, real estate advertising and marketing in Pune and other related topics, please, visit and join my Ravi Karandeekar's Pune Real Estate Blog Group

Thursday, March 12, 2009

About Indian economy and crash of Pune real estate market

Here are few links to new articles discussing Indian economy in 2009:

1) What's Wrong with 6% GDP Growth for India? - By Swaminathan S Anklesaria Aiyar

2) RBI’s growth target to be missed

3) Indian economy hard hit by global slowdown

4) Shankar Acharya: A cloudy outlook

5) World Bank says global economy will shrink in 2009 - By Samantha Bomkamp

Will Indian real estate market go down as low as US housing market?

My readers in US, who are witness to US housing market, always tell me that we, in India, have no idea how bad real estate market would be. I completely agree with them, yes, we don't have any idea.

If you read above articles, you will find that all of them agree on one point. Recession would be too bad. But Indian economy would be doing better than other economies. Bad Indian economy may not be as bad as we expect.

Is this planed positive dose or just plain rejection of reality? What is your take on Indian economy in recession. How bad it would be? As bad as US economy? Would real estate market will crash and may take more than 5 years to recover? Please, share your views in the comments.

Feel free to call me:

I enjoy talking, sharing my views and giving advice about buying property in Pune real estate market (so, i do not charge anything for the first 5 minutes!) Call +91 98600 44110

Subscribe for Free!

To receive free emails or free RSS feeds, please, subscribe to Ravi Karandeekar's Pune Real Estate Investment Blog

For my blogs on Pune real estate market news, real estate projects near Hinjewadi, real estate advertising and marketing in Pune and other related topics, please, visit and join my Ravi Karandeekar's Pune Real Estate Blog Group

Sunday, March 8, 2009

I don't expect deflation in India - Arvind Virmani, Chief Economic Adviser at the Finance Ministry

Virmani said he saw inflation continuing to ease in the coming weeks, but did not expect deflation in Asia's third-largest economy.

Annual wholesale price inflation, India's most widely watched price measure, fell to a 6-½ year low near 3 percent in late February.

"I expect inflation by March to be below 3 percent. This I have been saying since December. What is happening now is not a surprise move at least," he said. "I don't expect deflation in India."

Virmani said the government would have the "will and the ability" to return to its fiscal responsibility targets but did not say when that may happen.
To read more, please, visit - Slowdown in India until Sept

What is your take on the government's "will and the ability"?

Yes, i am talking about the new government which will come in power after these Lok Sabha elections. Do you feel that whichever government comes in the power will follow the same old policies? The new government will have same "will and the ability". Really? Then why spend Rs10,000 crore on the coming Lok Sabha elections? Just because elections are another type of a stimulus package? Please, share your views on Indian government's "will and ability" to revive the economy, in the comments.

Feel free to call me:

I enjoy talking, sharing my views and giving advice about buying property in Pune real estate market (so, i do not charge anything for the first 5 minutes!) Call +91 98600 44110

Subscribe for Free!

To receive free emails or free RSS feeds, please, subscribe to Ravi Karandeekar's Pune Real Estate Investment Blog

For my blogs on Pune real estate market news, real estate projects near Hinjewadi, real estate advertising and marketing in Pune and other related topics, please, visit and join my Ravi Karandeekar's Pune Real Estate Blog Group

India to soon have a housing starts index

A technical advisory group (TAG) set up by the Reserve Bank of India (RBI) has recommended the creation of a Housing Start-up Index (HSUI) to be based on newly-built residential units in urban India and compiled on a quarterly basis. The central bank is likely to launch the index, work out the computation methodology and monitor its evolution.

The number of housing starts during a period indicates the demand and supply situation as reflected in conversion of building permits into actual starts. Housing starts are considered lead indicators of economic activity due to their strong forward and backward linkages with other sectors.

The HSUI will be initially based on co-efficient matrices constructed for the six metros.
To read more, please, visit - -The Economic Times

Feel free to call me:

I enjoy talking, sharing my views and giving advice about buying property in Pune real estate market (so, i do not charge anything for the first 5 minutes!) Call +91 98600 44110

Subscribe for Free!

To receive free emails or free RSS feeds, please, subscribe to Ravi Karandeekar's Pune Real Estate Investment Blog

For my blogs on Pune real estate market news, real estate projects near Hinjewadi, real estate advertising and marketing in Pune and other related topics, please, visit and join my Ravi Karandeekar's Pune Real Estate Blog Group

Thursday, March 5, 2009

RBI cuts key rates, interests may soften further

The Reserve Bank on Wednesday cut its key overnight lending and borrowing rates by 50 basis points each with immediate effect, signalling banks to further soften interest rates. Read More

Impact of global financial crisis and subsequent economic downturn has turned out to be deeper and wider than anticipated earlier:

Policymakers expect India's economy to grow at a six-year low of 7.1 percent in the 2008/09 fiscal year that ends on March 31, after growing at or above 9 percent in the previous three years.

Analysts expect the economy to slow further in 2009/10.

On Friday, data showed growth in the December quarter slowed to an annual 5.3 percent, its slowest in nearly six years. Read More

The cut in reverse repo rate will force banks to lend more to industry which is badly in need of funds:

Keki Mistry, Vice-Chairman and MD, HDFC, feels there are two reasons for RBI to cut rates. "One, inflation is down to a real low. So by the time we get to June, one would probably look at a negative inflation number because of the base effect. The second factor could be the low GDP growth that we saw in the last quarter."

He feels the reverse repo rate cut is more relevant than RBI's repo step. "Currently, there are not too many banks that are borrowing under the repo window because there is so much liquidity in the system. So, everyone is parking money back to RBI through the reverse repo window. Hence, the reduction in the reverse repo is more relevant than the reduction in the repo rate because this means that there will be a further disincentive for banks to just go and park the money with RBI. It will mean that banks will be more willing to go out and lend money to industry, which is the need of the hour." Read More

So, what lies ahead for Indian economy?

According to Business Today, some feel that this is just the beginning of more bad news in 2009 as the full effect of the recession in the West hasn’t been felt over here as yet.

This is compounded by the fact that credit markets have become clogged and show no signs of easing up lending to consumers. Plus, banks are still not willing to extend much needed liquidity to credit-starved companies.

My readers in US, are telling me for a while that in India we are living in a lie. Now, it looks like that we have started accepting that we were too optimistic and now we are left with no option but to accept the reality. Please, share your views in the comments. (Comments Policy)

Feel free to call me:

I enjoy talking, sharing my views and giving advice about buying property in Pune real estate market (so, i do not charge anything for the first 5 minutes!) Call +91 98600 44110

Subscribe for Free!

To receive free emails or free RSS feeds, please, subscribe to Ravi Karandeekar's Pune Real Estate Investment Blog

For my blogs on Pune real estate market news, real estate projects near Hinjewadi, real estate advertising and marketing in Pune and other related topics, please, visit and join my Ravi Karandeekar's Pune Real Estate Blog Group

Sunday, March 1, 2009

Who benefits most by dropping home loan interest rates to 8.5%? SBI!

Opportunities:

Retail loans became expensive and often exorbitant which did not help the cause of the economy. This crisis presented an opportunity of sorts to the PSU banks. Customers shied away from investment products and chose to park their money in the deposits of these government-owned banks.

Deposit growth rates were soon soaring in the banking system. Taking advantage of this, SBI first lowered the home finance rates to increase its share of lending to the retail customers.

“Interest rates were expected to soften over the next one year. What SBI has done is to lower its rates ahead of the fall and with efficient structuring of its schemes has attracted attention from consumers”, says Vaibhav Agarwal, Banking Analyst, Angel Broking."

Profits:

With auto and home loans accounting for a very small part of SBI’s retail loan book, cross subsidisation has been easy which augurs well in the long term. Moreover, PSU banks are flush with liquidity as the deposits have grown at a rate that is higher than that of its advances in the quarter ending December 2008. The loan growth continues to be muted in the current quarter as well.

If PSU banks do not lend, the only option for them is to invest in the call money market and government securities. This would yield a return of at best 6-6.5%. SBI’s offer of auto loans at 10% is certain to fetch them higher returns than other investment avenues.

Things continue to be impressive on the financial front for SBI. For the third quarter ending December 2008, net profit grew 37% to Rs 2478 cr. Similarly, its deposits grew by over a third and its market share increased from 15.47% to 17.51%.

The advances growth stood at 30.9% and with this pace, it is the fastest growing large-scale bank. By comparison, the advances of HDFC Bank grew by just 14.2% and those of ICICI Bank actually showed a marginal decline.

SBI’s business per employee increased by 2.5 times in the last five years. At the same time, the bank has realised that to fund its high growth plans, it would require capital.

Senior SBI officials told ET that the bank would raise around Rs 4,000 crore through a bond issue at an interest rate less than 9% per annum. This would help in improving its capital adequacy ratio.
To read more, please, visit - Prashant Mahesh & Karan Sehgal-The Economic Times

What is your take on switching banks?

In fact, it's better to be with the bank who's financial health is sound! Is this going to motivate you to switch your home loan portfolio from Private Bank to SBI or any Public Sector Bank? Please, share your views in the comments. (Comments Policy)

Feel free to call me:

I enjoy talking, sharing my views and giving advice about buying property in Pune real estate market (so, i do not charge anything for the first 5 minutes!) Call +91 98600 44110

Subscribe for Free!

To receive free emails or free RSS feeds, please, subscribe to Ravi Karandeekar's Pune Real Estate Investment Blog

For my blogs on Pune real estate market news, real estate projects near Hinjewadi, real estate advertising and marketing in Pune and other related topics, please, visit and join my Ravi Karandeekar's Pune Real Estate Blog Group

Switching Banks: Take a decision based on the remaining tenure, penalty and processing charges

Just because another bank is offering lower rates, it may not make sense to shift:

You need to look many other factors:

1) Prepayment and foreclosure charges:

Already reports suggest that Housing Development Finance Corporation (HDFC) has hiked its foreclosure charges to 3 per cent to discourage existing borrowers from shifting.

2) Processing charges of the new loan:

Most institutions will charge anywhere between 0.4-1 per cent (average being 0.5 per cent) of the loan amount. You must add these charges to the outstanding loan amount to determine the accurate equated monthly instalment (EMI).

3) Outstanding tenure of the loan:

The tenure of the loan is the key in determining whether switching would make sense.

If the remaining tenure of the loan is more than 15 years, or if you have taken the loan in the last 2-3 years, even a 2 per cent discount to your existing loan will translate into a lot of savings.

In other words, if the interest rate discount is 2 per cent or more and your remaining tenure is over 14 years, you must switch the loan. At the same time, if the remaining tenure is 10-12 years, the benefits, though sizeable will not be as high.

4) Value of your flat:

Banks are more likely to value the same house at 20 per cent less. And then, give 70-80 per cent of the new value. Clearly, that means that you will need to shell out a large amount from your own pocket.

Worse still, if there is more correction, the bank has the option to ask you to cough out the more money otherwise you will be put in the defaulter's list

5) Time spent on paperwork and effort:

Besides, the technicalities and number crunching, there will be a lot of time spent on paperwork and effort, as you now have to deal with two banks.

6) Check with your existing bank:

First, check with your existing bank whether they are offering you a lower interest rate. Competitive banks, who don't want to lose a customer, will refinance your existing loan by charging a penalty and refinance fees.
To read more, please, visit - Amar Pandit-Business-Standard

What is your take on switching banks?

Is "switching banks" becoming time consuming and rather painful experience? Please, share your experience and tips in the comments. (Comments Policy)

Feel free to call me:

I enjoy talking, sharing my views and giving advice about buying property in Pune real estate market (so, i do not charge anything for the first 5 minutes!) Call +91 98600 44110

Subscribe for Free!

To receive free emails or free RSS feeds, please, subscribe to Ravi Karandeekar's Pune Real Estate Investment Blog

For my blogs on Pune real estate market news, real estate projects near Hinjewadi, real estate advertising and marketing in Pune and other related topics, please, visit and join my Ravi Karandeekar's Pune Real Estate Blog Group