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March 09, 2015

RBI Eases Affordable Housing Lending Norms

The Reserve Bank of India recently announced measures to cut the repo rate cut by 25 basis points and ease lending norms for affordable housing.


This Hindu article explains:


"... The listless real estate sector has been facing a liquidity crunch, and the budget had little for the ‘affordable housing’ segment or measures to take it forward... Developers were eagerly hoping for interest rate cuts to spur home buying. Sanjay Dutt, Executive MD, South Asia, Cushman & Wakefield, said, 'the increase in service tax is set to cause an increase in costs of buying and unnecessarily prolong the rebound of housing sales. Even while the magnitude of the rate cut is 25 basis points, the move will build confidence of developers and buyers alike that there are more rate cuts in the offing, provided of course that inflation maintains its downward trend or remains stable.'... Further, in a move to buoy the affordable housing market, the RBI late last week allowed banks to include stamp duty, registration and documentation charge to the cost of the house for the purpose of calculating the LTV (loan to value) ratio, provided the cost of the unit does not exceed Rs.10 lakh."


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