Banks attract more home loan customers during this festival

 According to the recent interest rate reduction effected by banks, they appear to be demonstrating a specific preference for growing their house loans within retail loans over the ongoing festive season.

Most banks have announced interest rate reductions on home loans, which are currently at an all-time low, while interest rates on other loans, such as auto loans and unsecured personal loans, have remained mostly steady.

During the current festive season, Kotak Mahindra Bank (from 6.65 percent to 6.50 percent), State Bank of India (from 6.80 percent to 6.70 percent), Bank of Baroda (from 6.75 percent to 6.50 percent), Punjab National Bank (from 7.10 percent to 6.60 percent on home loans over 50 lakh), and Union Bank of India have all announced home loan rate cuts (from 6.80 per cent to 6.40 per cent).

The banks would add credit spread to the aforementioned rates depending on a prospective borrower's credit score.


This reduction in house loan rates comes as industry analysts predict that increased raw material prices passed on to customers in recent months, as well as rising fuel prices, may be lowering demand for vehicles (and thus for loans to buy them).

Bankers are also concerned about the risk of stress in the unsecured personal loan portfolio.

Furthermore, banks no longer have the advantage they had over gold loan companies (GLCs) last year (between August 6, 2020 and March 31, 2021), when the Reserve Bank of India (RBI) allowed the former to lend up to 90% of the value of gold ornaments and jewellery to help households, entrepreneurs, and small businesses cope with the economic impact of the Covid-19 pandemic.

Now that a fair playing field has been established (both banks and GLCs can make loans up to 75% of the value of gold ornaments and jewellery), savvy GLCs can reclaim consumers who were previously lost to banks.

Low risks

According to banking expert V Viswanathan, banks consider housing loans to be the best bet for growing their retail loan portfolio because of the relatively low risk of default, lower risk weights (the minimum capital required to mitigate default risk has been reduced until March 31, 2022) and availability of strong collateral.

According to the monetary policy report, in August 2021, the spread – weighted average lending rate (WALR) over the policy repo rate – charged by domestic banks in respect of new rupee loans linked to the policy repo rate was the lowest in the case of housing loans and the highest in the case of other personal loans, in line with their risk profiles.

In the case of home loans tied to an external benchmark, the WALR spread over the repo rate for domestic banks was 3.19 percent in August 2021. In the case of vehicle loans and other personal loans, the aforementioned spread was 3.60 percent and 4.98 percent, respectively.

The repo rate is the rate at which banks borrow money from the RBI to bridge short-term liquidity gaps. At the moment, this rate is at 4%.

Conclusion

There's no need to be discouraged if your personal loan application is turned down. To boost your chances of loan approval, simply work on improving your credit report and following the methods outlined above. Once you've completed this checklist, you're ready to submit your personal loan application.To find about the best pricing and deals, call our toll-free number +91-9477079053. They'll help you in every way they can. Please contact me at Best Home Loan In India if you have any more. 

Comments

Post a Comment

Popular posts from this blog

What information do you need to apply for a business loan?

Image
 A business loan or overdraft could assist you with your next purchase, cash flow management, or business expansion. You (and any directors, partners, or guarantors) may be asked to give the following information when applying for company financing: Financial statements, preferably prepared by an accountant Proof of individual income Bank statements Identification A few extra things if you’re a start-up business These documents might assist your financial provider in gaining a better understanding of your company's financial status. You can apply for a variety of business funding options, including business loans, overdrafts, and credit cards. If you're asking for asset financing, you may be required to provide additional documentation. Financial statements Your financial statements will indicate your asset, liability, and net worth positions, as well as your income and expenses, all of which will be utilised to assess if you can meet your current and proposed payback obligatio
Read more

Home loan customers hoping for low interest rates to remain intact

Image
 In Estonia, variable rate loans are based on the six-month Euribor, which is now at -0.473 percent according to the most recent computation. A margin and a Euribor rate are commonly included in house loan interest. Euribor has stayed negative for the past six years, with a contract floor of 0%. Setting fixed interest rates in the housing loan market has never been very prevalent in the Estonian market, according to Taavi Raudsaar, an economist at the Bank of Estonia (Eesti Pank). "In 2006-2008, a little more was accomplished. Interest rates have largely declined since the global financial crisis and have remained at record lows in recent years. As a result, there was no reason to set the interest rate because the probability of a rise appeared to be low "According to Raudsaar. "At the same time, banks haven't been particularly aggressive in presenting this chance to customers," Raudsaar said. In the case of variable rate loans, the risk must be borne by the bor
Read more

A Guide to Eligibility for Business Finance

Image
 Almost every firm will require financing at some point. Some businesses require money urgently, such as to pay employees or pay a tax bill. Some businesses require it to support their day-to-day operations, such as purchasing inventory to fulfil consumer orders. Some businesses require it to expand, such as to pay for new facilities or machinery. Whatever the cause, the company seeking funding must meet certain eligibility requirements. We've outlined the eligibility criteria you should be aware of, as well as how you may prepare for them, in this article. What is eligibility? Eligibility is a method of determining how hazardous it is for a lender or finance provider to give you with funds. It should also tell them how much money they'll be able to give you responsibly. Why is eligibility important? It would be a foolish move on the lender's part to lend you money if you couldn't afford to pay it back. In that case, they'd be out of pocket, so it's in their bes
Read more